South Africa: Corruption allegations hang over failed $400m e-tolls saga

By Ray Mwareya

Posted on Thursday, 2 February 2023 10:41
Traffic moves along a freeway in Gauteng, South Africa. (Photo by Lefty Shivambu/Gallo Images/Getty Images)

Conceived in 2005 in the heart of South Africa's wealthiest province, the Gauteng Freeway Improvement Project (GFIP) had lofty goals of serving as a model for e-tolling motorists in Africa's largest auto market.

18 years on, the e-tolls project is a failed fiasco saddling taxpayers with a R40bn ($2.5bn) debt bill. Meanwhile, watchdogs warn of confusion and corruption over a promised R7bn ($400m) refund to some motorists who paid for the now-cancelled e-toll system.

The South Africa National Roads Agency (SANRAL) was in charge of e-tolling. In October 2022, Finance Minister Enoch Godongwana effectively scrapped the project.

Drive now; pay later

“The GFIP was going to be a ‘drive-now, pay later’ scheme” similar to the one in Stockholm, Sweden, Wayne Duvenage, chief executive officer of the Organisation To Undo Tax Abuse in South Africa, tells The Africa Report from Johannesburg.

Duvenage quit his job as CEO of Avis Car Rental South Africa in 2012 to marshall public opposition to the e-toll project. He was the public face of numerous court actions that sought to bin the GFIP.

The SA public defied the road e-tolling project because it was corrupt and expensive and made people angry

Blighted by allegations of corruption from the onset, the e-tolls project collapsed after working-class South Africans, led by Duvenage and workers’ groups, such as the Congress of South African Trade Unions, fiercely rolled out mass protests. Drivers’ refusal to pay the e-tolls and ‘drive-slow’ stunts made the project increasingly unpalatable for the government.

“The SA public defied the road e-tolling project because it was corrupt and expensive and made people angry,” Duvenage says.

Corruption allegations

According to Duvenage, in 2005, South Africans were told that the project would cost R4.6bn ($269m today) to build and widen 340km (210 miles) of roads in Gauteng province. Three years later, the costs had ballooned to R18bn ($1bn).

“Something went wrong,” says Duvenage. “We believe the mismanagement was done on purpose to make corruption take root.”

In March 2021, Duvenage’s organisation told local media that the Electronic Toll Collection (ETC), an Austrian-owned firm that SANRAL appointed to manage the collection of the e-tolls, allegedly paid a R40m ($2.3m) bribe to a dodgy subcontractor two weeks before ETC won the e-tolls contract.

SANRAL spokesman Vusi Mona firmly rejects allegations of corruption in the e-tolls saga. He tells The Africa Report, via email, that SANRAL cannot comment on allegations of corruption, and encourages anyone who has evidence of fraud to contact police. ETC, for its part, did not respond to emails sent to vice president for communications Carolin Treichl seeking comment on corruption claims.

E-tolls worked in Stockholm because they got the public buy-in, the administrative costs were reasonable and they controlled the corruption. Unlike here

“If you want to build a credible electronic tolling of roads, you better do your homework,” Duvenage tells The Africa Report.

Duvenage has also written a letter to SANRAL demanding to know why Gauteng motorists are now expected to pay 30% of its total GFIP debt of R43bn ($2.5bn) instead of what he says is the R21bn ($1.2bn) borrowed for the project.

“E-tolls worked in Stockholm because they got the public buy-in, the administrative costs were reasonable and they controlled the corruption. Unlike here,” says Duvenage.

Others however point to unique challenges in Africa.

“These e-tolls mega projects sound ‘big-techy’ but are difficult to roll out in Africa’s cities due to affordability and law enforcement limits,” says Tapuwa O’brien Nhachi, a former environment scientist with the Centre for Natural Resources Governance in Zimbabwe. “As the failed South Africa e-toll shows, motorists from informal economies can’t easily afford the added taxes of e-tolls. Enforcing e-tolls requires a digitized link between police, banks, and surveillance tech and courts. That’s a big ask for many of Africa’s city municipalities.”

Nightmare refunds

On New Year’s eve, hopes of a silver lining emerged when Gauteng Province Prime Minister Panyaza Lesufi promised on a radio show that Gauteng motorists who paid for the failed e-tolls project would be refunded to the tune of R7bn ($400m).

However, optimism soon turned sour when it became clear that SANRAL, the agency in charge of all national roads tolling across South Africa, wasn’t ready to make any such declaration.

Refunding motorists is going to be a big, corrupt administrative nightmare

“It’s very confusing,” says Duvenage. “You have one authority speaking on behalf of another authority.”

Mona, for his part, tells The Africa Report that SANRAL has yet to receive “firm” instruction from the joint committee of the “political principals” – SANRAL; the Gauteng province government, and South Africa’s finance minister – on the issue of refunds.

“Refunding motorists is going to be a big, corrupt administrative nightmare,” Duvenage says.

He says the South African National Road Agency is broke and any money for refunds is already budgeted for elsewhere.

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