Two municipalities, both ANC-run, tell the story of where it all went wrong

Steve Tshwete and eMalahleni are neighbouring municipalities in Mpumalanga run by the same party, but with very different financial performances.
In one case the old management was tossed out to make way for party political appointees; in the other the original administrators and managers were retained. Image: Getty Images

There’s no question the DA does a better job than the ANC at running municipal finances. This shows up in survey after survey.

There’s also no question the ANC has infested local governance with cadre deployments and the results have been catastrophic. People with no proven aptitude for management are left to run municipalities into the ground. In any self-respecting country, they would be run out of town with pitchforks.

The latest Ratings Afrika Municipal Financial Sustainability Index (MFSI) survey leaves one with no other conclusion than that the DA is trying to show up the ANC, and is succeeding. The DA-dominated Western Cape is leagues ahead of the ANC-heavy Free State and North West provinces when it comes to local government.

Most municipalities are so crippled with mismanagement that many will now become wards of National Treasury.

Local government was already in need of R30 billion to cover revenue shortfalls before Covid-19 came along, prompting national government to allocate R20 billion on an equitable share basis, roughly half of which will go to Covid-related costs. This won’t be enough. The revenue picture in metros and municipalities has deteriorated sharply since lockdown started in March.

Read: Proposed new taxes to help dysfunctional municipalities

The question of what to do to fix the problem is going to need serious attention. One of the suggestions is to merge successful municipalities with bankrupt ones, but this will be fought tooth and nail by those who have managed to keep their finances in some kind of order. Nor is it true that all ANC-run municipalities are failing.

Analyst Leon Claassen of Ratings Afrika, lead compiler of the MFSI, points to two neighbouring municipalities, Steve Tshwete (formerly Middelburg) and eMalahleni (formerly Witbank), which are both ANC-run. The former is a relative model of financial prudence, the latter is a basket case.

The difference

“What Steve Tshwete has done well is to retain the original administrators and managers, and has largely avoided making party political appointees. This shows up in their financial and operational performance, which has been rather consistently good,” he says.

“The same cannot be said for its neighbour, eMalahleni, which is failing terribly in both operating performance and liquidity management. In this case, the old management was tossed out to make way for cadre deployments, leaving people often with no experience to run a municipality of more than 500 000 people. These two municipalities have very similar economic bases so their financial performance should be very close. But they are not.”

Claassen says it is wrong to think the entire local governance model needs to be reimagined.

“What needs to be done is to look at the successful ones, and there are plenty of them, and adopt those as templates for the ones that are failing. The critical failing is in the area of management skills. We have to get rid of political deployees and put in professional managers if we are going to fix the problem.”

The Ratings Afrika study takes a broad look at financial sustainability, measured around six components: operating performance, liquidity management, debt governance, budget practices, affordability, and infrastructure development. Municipalities are then given a score out of 100.

The largely DA-run Western Cape comes out on top with an average MFSI score of 59. Down at the bottom is the Free State (mostly ANC) with 21. The national average is 37 (or 31 if the Western Cape is excluded).

But that’s not to say all ANC-run municipalities are shockers. Steve Tshwete is an example of relative excellence.

Source: Ratings Afrika

What’s clear from the Ratings Afrika comparison of these two neighbouring municipalities is that basic financial management is much closer to National Treasury’s ideal at Steve Tshwete than is the case at eMalahleni. For example, the debtors collection rate at Steve Tshwete is an astonishing 98% (the target is 95%), while it has slipped below 65% at eMalahleni.

That in itself can mean the difference between solvency and bankruptcy.

Steve Tshwete has run consistent surpluses, while eMalahleni has clocked up deficits of R823 million for the three years to 2019.

eMalahleni has very little capacity to borrow, so has virtually no long-term liabilities, but its debtors figure has grown nearly four-fold over the two years to 2019 to R2.7 billion. That’s likely no more than a bookkeeping entry since the Municipal Finance Management Act prohibits municipalities from writing down overdue debtors even when there is little chance of recovery.

Staff costs as an indicator

Another useful index of municipal efficiency is staff costs as a percentage of revenue: 27.5% at eMalahleni versus 34.6% at Steve Tshwete (which has a larger area to service, though its population of 336 000 is smaller than eMalahleni’s 526 000). Steve Tshwete spends a larger portion of its total revenue on infrastructure development, which would account for the larger percentage of staff costs.

We previously drew attention to Steve Tshwete municipality and the pay increases it awarded itself during lockdown.

But in the larger scheme of things, it deserves credit where due.

Cash from operations as a percentage of total income is 8.7% at eMalahleni, compared with 16.2% at Steve Tshwete. This means Steve Tshwete is more efficient at charging for services such as electricity, water and refuse, and collecting property rates from residents.

“It’s not rocket science,” says Claassen. “There are centres of excellence in the municipal government arena, and we have to replicate those.”

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Very easy to fix the problem… Don’t vote for cANCer!

I heard this story about a guy who used to work at the municipality of some small town in the Southern Cape (could be Joubertina). His job was inter alia to dig graves in the local cemetery. However, he was a man with ambitions and got involved in politics. With the change in 1994, he became the local mayor for the ANC. The first thing he did was to go and buy himself a brand new BMW. Overnight this man went from grave digger to mayor and this was widely heralded as a “victory for transformation”. But it didn’t take long before a bun fight broke out between those “on the inside” and those wanting a piece of the new found pie. Soon priorities changed, and later service delivery, water, sewerage etc all stopped functioning. It all went downhill from there.

It’s very elementary my dear Watson. Just see what works, then do the opposite, socialist-style! Then when things start to fall apart and the crowds get restless the President will make a speech, like a benevolent father, to the nation calling for unity, patriotism, some empty promises and a commission of enquiry just for good measure. Viva ANC cabal viva!

This MFSI Ciaran outlines is a great innovation in reporting standards.

It sheds some light on the seemingly bottomless pit of ineptitude in municipal management most of us have been subjected to over the last 20 years.

Most interesting to see budget lines that are bruised and battered, if not raped and pillaged, such as operation performances in the deep negatives year on year.

Nonetheless, the “debt governance” line items are all in the relatively acceptable level of the 60’s to 70’s. ANC cadres showing some form of management talent as debt-collecting heavies?

If a person leaves a legacy, that legacy is not measured by the good intentions, the quest for equality or the time spent in prison. That legacy is measured by the current circumstances that are the results of the actions that were put in place by that person. The bankrupt SOEs and municipalities, power cuts, sewage in the streets, a declining standard of living for the average citizen, unemployment and an imploding public healthcare system is the legacy of the ANC elite, the elders. You may be a Nobel Peace Prize laureate, but if your organisation and your efforts cause harm to the average citizen, then that is your legacy. I am sorry to say, but millions of people cannot eat a Nobel Prize or use it for sanitation purposes.

There is nothing ethical or exemplary about the ANC. They are an unmitigated disaster, even for their supporters.

Absolutely after spending 25 years in jail we were told by our new leaders in 1995 that the apartheid state used resources inefficiently and that the ANC would correct this.

Famous last words.

Wow @Sensei, this is low and messed up even for your typical narrative… bla bla bla “communist”… bla bla bla “socialist”… bla bla bla “collective”…

When you actually mean …. people?

Truly some peoples minds are so twisted that they will only ever see things their way…

Those people who you refer to that went to jail fighting against people that literally PHYSICALLY (and otherwise) abused them surely can’t be directly compared to financial corruption/ mismanagement in the current context?

There’s a story of a man thrown off the 10th floor of a POLICE STATION (!) where opposition were regularly TORTURED which was subsequently covered up by the government of the day…

That person you speak of will have a legacy of overcoming that kind of brutality and forevermore deserve his Nobel Prize in the eyes of most people of colour. Some of whom are making a positive difference in the country for all people… instead of prejudicially commenting 24/7 at the bottom of news articles

@TryingToRetire … a majority of the majority of thinking HUMANS in SA will agree that resources are spread more efficiently to people today than the apartHATE state did

For every Ahmed Timol, there are 143 Life Healthcare Esidimeni deaths due to ANC incompetence and negligence. For every Sharpville shooting, there are the 34 miners killed by the ANC at Marikana. The looting by all ANC councillors and parliamentarians are enabled by every ANC member. The bankruptcy of municipalities and SOEs is the result of ANC policies.

I care about real lives. I am involved as a volunteer worker with a charitable organisation that provides frail care to 100 disadvantaged people from the whole community. I provide free housing, electricity and water and sanitation to 60 black people and provide school clothes for their children. I am a capitalist.

As a socialist ANC member, how many people do you support? Where is your ubuntu? The ANC is all about plunder and no improvement in the lives of the poor. It is a disgrace and a farce and if you support them, you are a disgrace and a farce.

The highest unemployment figure in the world. The debt/GDP ratio out of control, the budget deficit in hyperinflation territory, the most militant labour unions in the world. The highest inequality in the world. The most corrupt government in the world. The most socialist government policies in the world. What kind of fool fails to connect the dots? Proud ANC supporters are displaying their shocking and disgraceful lack of cognitive ability. Your time is up. The country cannot afford your stupidity any longer.
I am waiting for your reply.

The future is here. Those who think think this will be a glorious or prosperous reality are fools or have their snouts at the trough of public money. There is no future for your children here. Say goodbye, get out of the comfort zone, and move on.

https://twitter.com/i/status/1298308106426908672

You ‘cannot necessarily’ put the blame of the rot and deterioration and fall of a nation/society on a predecessor. A successor can dishonor the values,teachings,principles and ethics of his predecessor.

The Nobel Prize laureate who spent 27years in prison is not to blame for the current state of the ANC. In fact, there is usually a distinction from the old ANC(pre ‘98) to the new ANC(at play currently of which is totally incompetent,corrupt,evil).

Emperor Augustus cannot be blamed for the fall of Rome. Genghis Khan cannot be blamed for the fall of the Mongolian Empire. Conversely, Adolf Hitler cannot be praised for what Germany is today. Charles Robberts Swart cannot be blamed for South Africa to have had its first black president. Sensei The Great, your statement is not always true.

There are times when your statement is true though. Robert Mugabe and Zimbabwe. Osama Bin Laden and Al Qaeda.

King Khan, fair comment. The ANC is the same organisation though. The current situation is merely the natural conclusion of the process that was started by the Great Nelson Mandela, the Knight for Peace and Reconciliation. As described by the other Nobel Prize laureate, August Hayek, socialism is never stationary. It is a process that moves towards decay, poverty and enslavement. The elders put this process into motion, they provided it with fuel, and they still support this process today.

I am sorry, there is no logical explanation for anybody to support the ANC, other than the fact that such a person is also waiting for his opportunity to steal from the poor.

Sensei i really really do share your frustrations and sentiments about the ANC. A vast majority of them would be better off feeding worms in a small wooden box, in the crust of the earth.

All those fallen empires were still the same organisations from their glory to their demise. Germany is still the same country (though exponentially better). Anc is the same organisation yes, with the same policies in place. I get that and totally understand that. Coming from a place this country came from, no policy, no individual would be so perfect to undo what happened earlier so soon. The mighty United States of America is STILL struggling with a similar problem 200years later. They too cannot blame George Washington, Thomas Jefferson, Ben Franklin and crew, because they still have some of the same 200year old policies in place to this day. Mandela is no exception. It is just not fair. The same leader who averted a civil war that was about to erupt in any minute, especially after the killing of Chris Hani. Our country would not be what it is today had that war happened.

I am not praising ANC, i am however defending Mandela and his leadership. I totally agree with you, which ever person is for the ANC, is wickedly foolish and tone deaf.

Of course he is to blame, he took over a role with no idea as how to fulfil the responsibility effectively. As I have stated before, he would have had more chance of taking over Apple, Coca-Cola, IBM, Ford, successfully,than SA Inc, and those chances were very slim at best. He lacked the experience, knowledge, planning and foresight, something idealist Socialist’s always do, to run a Democracy successfully. Whether Maggie Thatcher said it or not, it’s true, the ANC from Mandela on, were not ready, simple as that!

If Mandela is to blame, certainly his predecessors are to be blamed as well. CR Swart all the way down to FW De Klerk, they knew absolutely nothing about democracy. Why does the buck BEGIN with Mandela? Your failure to apply your brilliant Apple,Coca-Cola, IBM mind in this SNOWY is utterly appalling. Your Lack of prudence is nothing far from that of the ANC. You provided NOT a single factual statement.
South Africa was not born in ‘94. Mandela inherited a host of problems. S.A under the leadership of this clueless man managed to bring down its inflation by 9%(from 14% to 5%). Brought its interest rates down from 16% to 9%. And that is under a man who is clueless. The sacrificial lamb of John Vorster and cahoots.

You say anc FROM Mandela on was not ready. Which ANC was ready for you? Perhaps under Oliver Tambo? Or under Albert Luthuli when CR Swart banned them? We both know you will say it was never ready. Was the National Party supposed to keep being in power? For SA to remain sanctioned. Tax rates as high as 50%. The National Party and ALL its leaders were also NEVER ready usher this country into something we all(assumption) as citizens are dreaming of, the perfect democracy that exists only on paper.

We can all agree that the ANC is curse that befell this country and we all want it gone.

Asalaam Aleikum to you King Khan.

Am no ANC supporter myself (like Sensei) but I can try to fathom share your frustration with faltering ANC leadership. I have a few respected (coloured, Muslim & Hindu) clients that tells me they fought with ANC againsts the old regime, and yet utterly disappointed today what the ANC has become since Zuma-era. Families are torn apart in support for & against ANC.

The (struggle-era) ANC supporter deserves better leadership, I know.

You need to read RW Johnson’s book to understand the ANC (he was a member himself & anti-apartheid activist).

Unfortunately, current ANC anti-business/anti-capitalist policies are slowly taking SA to a Zimbabwe direction. The people that will suffer is the next generation, that will be left behind, with few skilled people left over to make things happen, and to care for others. The waves of kids that will still emigrate, won’t care about the peers’ suffering here in Mzansi.

The ANC’s usefulness has possibly reached its expiry date. SA needs leadership that will take it towards newfound prosperity.

Salaams

Wa alaikum assalam Michael.

I am very much against the anc and their dangerous political-economic policies as you have pointed out. Their constant disregard of economic forces and the sciences behind them, is what will eventually kill off the very people they claim to be for.

Thank you for the prescribed author and will definitely look into his work so that I can engage much more with you on many other topics.

Be well.

I would say that the DA does not even need to deliberately make any effort at all of trying to “show up” the ANC….the DA simply just needs to do a vaguely decent job of running municipalities and it would still be head and shoulders and entire body above the rest (administration is not really rocket science, an idiot could fare ok if he just had integrity).
The ANC appointees are showing themselves and their party up as all sorts of metaphors for ineptitude and dishonesty.
This is a growing character problem in this world…the rise of people in politics etc that shoot down the people that they make their own selves look bad against (look at Mr Trump).

Im shocked that you would say appointing professional managers could do a better job than political appointees!

Ratings Africa is on the money with their comparison. The ANC council I worked for retained all the experienced managers and only replaced them with deployees when they left on their own choice. New deployees came into an established team and had time and were assisted to grow into their posts. I even wad allowed to srlect my successor and train him for five months. I spoke to one of their financial people last week and although they had considerable Covid related non-payment losses, their Eskom account is still up to date. In another article you can read about another ANC town, Parys. I happened to know their Electrical Engineer in the early nineties. Their electricity department was in excellent shape. He was in his forties, so he could have served them for another 20 years, but they forced him out shortly after 1994 and the results are there to see today. Massive arrears and reduction of supply by Eskom. Unfortunately, the ship has sailed for the municipalities who wasted their experienced people, because most of them are now retired.

Garbage, how can you compare DA that robs from the poor to build up the effluent suburbs? Does gugulethu get the same treatment as blouberg? Do they have labour claims in court or wont the illegal foreigners complain? Have you seen a concentration camp in any anc run province or only in cape town? Just facts.

Ballin, are you for real? Do you not realise that, around the world, the people who have money can pay for better services, bigger cars, better homes etc. If you are not contributing to municipal services, how can you expect to get the same treatment? Your ‘facts’ are baseless, your attitude typical of a Communist/Socialist mentality, an ideology that has ruined over 50 countries worldwide.

Yeah you right. The effluent running in the streets of the affluent suburbs

Oh boy. Do you have your head up you butt!

If people hate Cape Town so much, why do they keep flocking here?

The article, and my comment, compare two ANC municipalities. Two well run and two poorly run by the same party. The difference is in the approach.

by paying their rates and taxes for the service?

When a municipality is taken over by Nat Treasury,-Do the mayor and cadres still getting paid? If so–why for still doing nothing, without responsibilities?

“The same cannot be said for its neighbour, eMalahleni, which is failing terribly in both operating performance and liquidity management. In this case, the old management was tossed out to make way for cadre deployments, leaving people often with no experience to run a municipality of more than 500 000 people.”

Extrapolate to the entire country and the reason for our dismal economic performance is obvious. How though, does one overcome the “colonialist” brainwashing of the likes of the EFF?

I have always said that officials run a municipality. Officials do the work, repair pot holes and run the sewage works and mow the parks. If the officials are good and have pride in their work then all is well. If not, then sewage run into the streets.

RW Johnson’s famed statement comes to mind:

“SA can choose to have the ANC, or a modern industrialized economy. It cannot have both.”

End of comments.

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