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‘We are tired of being taken for granted’: Caught in the crossfire of South Africa’s money wars

By Crystal Orderson in Soweto and Cape Town
Posted on Thursday, 20 October 2016 09:31

Soweto, the country’s biggest township and the heartland of the anti-apartheid rebellion, speaks for the new South Africa in so many ways. With African National Congress (ANC) councils ceding power across the country after local elections in August, Sowetans are forthright about their demands for change. Johannesburg, which includes Soweto, has a new mayor from the Democratic Alliance (DA).

Since national liberation in 1994, Soweto has been transformed from an urban wasteland to a collection of thriving markets and malls. Communities have newly paved roads, and there is free Wi-Fi at bus stops. Soweto has also become a tourist mecca for admirers of Nelson Mandela, Walter Sisulu and other eminent former residents. Those benefits have come under ANC rule. But discontent is growing at poor service delivery, lack of jobs and state corruption.

Sowetans, like other South Africans, weigh their votes carefully. In local elections on 3 August, the ANC’s share of the national vote fell to 53.9%. As the results came through, gregarious Sowetans were in the streets dancing to live bands and quaffing local beer.

Support sharply grew for opposition parties across the country, but there was no landslide. The centre-right DA won 26.9%, and the leftist Economic Freedom Fighters (EFF) won 8.2% of votes. The opposition was boosted by 3.3 million ANC voters who stayed away from the polls. In Soweto, ANC officials reckoned that almost half their supporters failed to vote. ANC backers milled around, some wearing their party T-shirts with pride, despite the decline in national popularity.

‘The people have spoken’

Other Sowetans just wanted to try the opposition. December Sabande, a 34-year-old driver, told The Africa Report: “We must give the DA a chance. People just want a home, a job. The ANC comrades parade their fancy cars here.” Like others, Sabande said he was “tired of being taken for granted” and voted against the ANC. A Sowetan pensioner who requested anonymity complained: “The ANC is arrogant and has taken us for granted. We are tired. I voted for the DA and want them to govern.”

Such views hit home with Paul Mashatile, the ANC’s leader in Gauteng, the province that includes commercial capital Johannesburg and political capital Pretoria. “The people have spoken. They didn’t like what the ANC has become. We have grown dismissive, pompous and condescending,” he told the province’s executive committee in September. “Let us not blame the people. We are at a tipping point.”

After the August elections, no party has an overall majority in 27 out of 278 local councils. In most of them, the DA will be in control, backed by promises of other opposition votes. That could prove highly problematic, according to Andries Nel, deputy minister of local government. “After the 2011 local government elections, there were 31 hung councils. Many were dysfunctional due to unprincipled parties and fractious coalitions,” he explains.

For much of the country, the election means a change of financial chiefs as well as the political guard. Today, the ANC controls just 43% of local authority budgets; in 2011, it controlled 82%, with the jobs and patronage that go with that. In particular, it has lost several of the richest metropolitan authorities: Johannes­burg, Tshwane and Nelson Mandela Bay represent a quarter of South Africa’s 50 million people and large local resources, with budgets of, respectively, R54.8bn ($3.9bn), R32.8bn and R10.9bn. Tito Mboweni, a former Reserve Bank governor who is a dissident voice within the party, says the ANC risks becoming “a governing party without economic power”.

Uncharted territory

Jackson Mthembu, the ANC’s chief whip in parliament, concedes that the metropolitan authorities are “critical to the economy of the country, and they control serious budgets”. In fact, more than 9% of this year’s R1.46trn national budget spending will go to the municipalities.

Professor Jaap de Visser, a local government expert at the University of the Western Cape, argues the elections will hugely change the political balance, however the councils work on the ground. “The fact is they [ANC] have lost a huge amount of leverage over operating expenditure, and this is enormous,” says De Visser. “You can link this to patronage. Whether it is real or not, it is a game-changer. It is uncharted territory for the ANC and the country.”

No short-changing

Some opposition politicians and civic activists worry that the ANC, which remains the dominant power at the centre, could use its control of the national purse strings against opposition-controlled metropolitan authorities and local governments.

In an interview with The Africa Report, minister in the presidency Jeff Radebe insisted there would be no political discrimination in budget allocations: “We are going to support all spheres of government – even metros not governed by the ANC. The change of guard does not affect the National Development Plan’s goals.”

But DA politicians says they are monitoring the allocations closely and will take legal action if they are short-changed, as funding levels are statutorily determined. Athol Trollip, the newly elected DA mayor of Nelson Mandela Bay, has already picked his spending targets: “The main priorities are to improve service delivery, stop corruption and grow the economy to create jobs.”

De Visser points out that there is a very robust framework on financial allocations. “I have complete faith [about] how the treasury will work,” he said, adding that finance minister Pravin Gordhan would allocate the legally stipulated funds to each metro, regardless of which party is in charge.

Arguments over patronage have escalated to the extent that many state appointments are now subject to special legal scrutiny. Newly elected mayors on the DA ticket have already launched investigations into what they regard as wasteful expenditure.

Mayor Trollip of Nelson Mandela Bay is likely to find much to probe in his locality. Nelson Mandela Bay municipality recently racked up R423m in wasteful expenditure, making it the worst offender according the latest report by auditor general Kimi Makwetu. More widely, management of local authority cash is weakening. Makwetu’s audit reports that irregular spending doubled to R14.75bn since 2010/2011.

Mashaba’s crusade

New DA mayor of Tshwane, Solly Msimanga, plans to investigate several agreements, such as the multibillion-rand Tshwane House contract and the metro’s flagship Wi-Fi and broadband programmes. He argues that the contracts are poor value for money, perhaps corrupt.

In Johannesburg, new mayor Herman Mashaba, who worked his way out of poverty in Soweto to found the Black Like Me hair-products empire, has set himself some high targets: to make the city’s economy grow by 5% and cut unemployment to 20% (the unofficial rate is reckoned to be around 40%) within five years. Mashaba, whose autobiography is entitled Capitalist Crusader, does not hide his predilection for free-market and “libertarian” policies. He opposes the ANC’s minimum wage legislation as damaging to jobs and social mobility.

Already, Mashaba has ordered a city-wide campaign to clean up the streets and repair roads. He has appointed a senior civil servant to liaise with property developers and says he wants to woo capitalists of all descriptions to set up in the city and make money. For his plan to re-engineer Johannesburg, Mashaba wants to take what he says is R5bn of wasteful spending in the ANC’s old budget and plough it into creating jobs and growth for the city.

Down in the Eastern Cape, the United Democratic Front’s Bantu Holomisa has joined a coalition government with the DA in the Nelson Mandela Bay metro. With a colourful career in the military and Bantustan politics, as well as being close to Nelson Mandela’s family, Holomisa remains an important politician.

He wants Trollip’s DA-led administration to “realign budgets in order to ensure maximum resourcing of priorities”. It will test the DA’s political skills to keep all its diverse coalition partners on board. The EFF has told the DA it wants budget reforms as a means to boost funding sharply for education, health and housing development.

Shotgun marriage

Home affairs minister Malusi Gigaba, like others in the ANC, confidently forecasts the failure of what he describes as a shotgun marriage between the DA and EFF. “It represents opportunism, short-­termism and instability, and citizens of these municipalities will experience a period of instability, horse-trading and petty political manoeuvring rather than a focus on sustainable transformation,” Gigaba argues. Opposition activists say that some of Gigaba’s comrades in the ANC will do as much as they can to make that a self-fulfilling prophecy.

Even without ANC interventions, the new opposition-led metros will be fighting powerful economic headwinds, with South Africa’s economy teeter­ing on the brink of recession and a threatened government downgrade by ratings agencies.

Most of the ANC’s immediate problems are political: quarrelling factions and regional splinter groups are contributing to the complex and confusing struggle to succeed Jacob Zuma. Elections for party president will be held at an elective conference in 2017, and that will be followed by national elections in 2019.

Although Zuma continues to preside over solid majorities in the ANC’s national executive and national working committees, the President and his allies are coming under growing pressure to develop a credible succession plan. Some ANC activists predict that the days of Zuma patronage have perhaps a year to run. Contenders for the leadership are setting out their platforms and trying to widen their support bases.

Some of these rumbles have started even in Zuma’s home province of KwaZulu-­Natal. There is a messy stand-off in nine municipalities where no party won majority control in August. In membership numbers, KwaZulu-Natal is the biggest province for the ANC, but its provincial leaders face growing opposition from within the party.

In Jozini, the ANC refused to elect a new mayor and unsuccessfully tried to outmanoeuvre the Inkatha Freedom Party, which is making alliances with other small parties. Although Inkatha signed a special co-governance agreement with the DA and the EFF, this is yet another improbable political liaison given the party’s roots in Zulu nationalism and the ambitions of its leader, chief Mangosuthu Buthelezi. It takes some back to the 1990s and the shooting war between Inkatha and the ANC in KwaZulu-Natal.

Tempers flare in KZN

Political violence is rising again in the province and both sides are ramping up the rhetoric. Inkatha’s Mkhuleko Hlengwa accused the ANC of running scared in Jozini and neglecting its responsibilities to the community by engineering a political stalemate. Nomusa Dube-Ncube, KwaZulu-Natal’s commissioner for cooperative governance and traditional affairs, brought in lawyers to resolve the dispute.

Although these localised political and money fights are bruising enough, the main contest is about control of the national treasury. And that affects every layer of government: from the splendour of the Union Buildings in Pretoria and Tuynhuys in Cape Town to a kraal in the hinterland where people are demanding clean water and reliable electricity.

It pits President Zuma and allies against finance minister Gordhan, who is strongly backed by what can best be described as ANC modernisers or constitutionalists. Smarting from its loss of patronage at the local government level, the presidency is eyeing massive but loss-making parastatal companies and has set up a special committee to oversee their operations. Yet even this grand committee cannot countermand the legal rules governing the treasury’s allocation of funds to state companies – at least not while Gordhan is in charge of the treasury.

Zuma’s cheerleaders want a personalised style of rule, under a mighty presidency with an iron grip on security and intelligence together with contracts and budgets. Gordhan and those backing him want substantive authority for ministers and the heads of state-owned enterprises, but they also insist government must be held rigorously to account.

While South Africa’s widely praised constitution – one of the most progressive in the world – underlines the importance of strong and independent institutions, politicians are chipping away at it. It was finance minister Nhlanhla Nene’s insistence on accountable management of state companies that prompted President Zuma to sack him last December.

Gordhan on a tightrope

Under pressure from ANC grandees and bankers’ doom-laden predictions, Zuma was forced to sack his chosen replacement for Nene, Des van Rooyen. Reluctantly, he brought back Gordhan as finance minister to steady the markets, stabilise the rand and stop another punishing interest rate rise.

But politics is back centre-stage after the local elections. Talk about Zuma reshuffling the cabinet and firing Gordhan has resurfaced. More palpably, the government’s special investigating unit, the Hawks, has resuscitated its bizarre investigation into Gordhan’s launch of a surveillance unit designed to boost tax collection when he was head of the South African Revenue Service.

Behind the Hawks, Zuma’s loyalists in the National Prosecuting Authority and the ANC youth and women’s leagues are all baying for the finance minister’s blood. And Van Rooyen, now sporting military fatigues as deputy leader of the uMkhonto we Sizwe (Spear of the Nation, the ANC’s much-celebrated armed wing) is back lending his weight to the campaign against Gordhan.

Deputy president Cyril Ramaphosa, ANC secretary general Gwede Mantashe and ANC treasurer general Zweli ­Mkhize have led public support for Gordhan while trying to play down the factional rivalries that risk tearing apart the ruling party’s leadership. The race to succeed Zuma as ANC president at next year’s elective conference further complicates everyone’s calculations. Gordhan is respected in the markets for his management but it is his political nerve and determination to hold the line that could prove to be his greatest asset in the longer run.

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