Cronyism at key municipalities is hobbling big business – BLSA

The days of impunity at local government are over, says Velenkosini Hlabisa, Minister of Cooperative Governance and Traditional Affairs (Cogta).

This is the latest attempt to convince big business that government is mindful of the litany of challenges in the country’s municipalities that is affecting the business operating environment.

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The long-standing diagnosis of inefficiencies at local government again found expression on Thursday at a meeting between the minister and some business leaders.

Business Leadership South Africa (BLSA) released its Reform Tracker Quarterly Review during the gathering. Launched in August 2025, the tracker monitors progress on over 200 reform processes impacting business.

Reforms in water, energy, and freight logistics are still among the key issues on the table after years of tough choices for businesses about where to invest amid collapsing infrastructure in major cities.

Corruption, cadre deployment

Industry leaders have now shifted their attention to claims of corruption and what they label as cronyism, cadre deployment and inept officials running municipalities, which have contributed to poor service delivery.

The recent testimony at the Madlanga Commission about flouted regulations and weakened supply chain processes have only added to anxieties among investors.

Hlabisa says government is addressing the trust deficit, starting with political interference in operational matters.

“That is why we are emphasising the separation of duties between political leadership and administration and that for the recruitment of the officials, there should be no political interference,” he told business leaders in the room.

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“A committed MM [municipal manager] will always go for a committed CFO.”

The reference strikes at the core of what the Madlanga Commission, probing alleged political interference in the criminal justice system, has exposed about appointments in key municipalities.

Tshwane CFO Gareth Mnisi is the latest technocrat to be embroiled in claims of municipal tender rigging. On Thursday, President Cyril Ramaphosa also suspended Police Commissioner Fannie Masemola, who was placed on precautionary leave pending the conclusion of a corruption case.

This follows Masemola being fingered in the Madlanga Commission in connection with an allegedly fraudulent tender.

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“What we are seeing at the Madlanga Commission should give confidence to the public that we are seeing arrests, and we are looking closely that it doesn’t end at arrests and that there should be sentences,” says Hlabisa.

“The moment you start consequence management, that’s where trust can start to be rebuilt and regained.”

He adds that checks and balances must be put in place to ensure that municipal councils, post the upcoming local government elections, appoint suitable officials into office.

Read: Treasury closes municipal money taps

While he hasn’t given too much detail yet, Hlabisa hinted at a register kept at the National Treasury that would list previous municipal employees accused of wrongdoing, to prevent the reshuffling of those found wanting.

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The third BLSA Reform Tracker Quarterly Review, covering January to March 2026, shows South Africa’s overall reforms completion index at 71.75 – up 27% from the March 2024 baseline.

Quarterly momentum has eased to 0.4 points, with a 4% decline in freight logistics and a second consecutive quarter of no movement in governance reforms being the main concerns.

The freight logistics completion index fell 4% to 69.16, the sharpest single-category decline of the quarter

This is a reflection of delays in regulation, market reform and private sector participation in ports and rail.

Structural tensions

Referring to the setback in freight logistics, BLSA CEO Busisiwe Mavuso notes that the framework architecture, at this stage of Transnet’s unbundling processes, leaves the state-owned entity to be both referee and player at the very time the industry is being opened up to private sector participation.

Similar issues are affecting energy sector reforms.

Addressing these structural tensions remains a priority, but Mavuso says the reform agenda must also look further ahead.

“It is equally important to ask what comes next, not just addressing new layers within existing reform areas, but identifying entirely new areas that require fundamental reform to secure the country’s long-term future.”

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