Is Joburg financially attractive? – Moneyweb

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DUDUZILE RAMELA: The DA is taking the City of Johannesburg [CoJ] to court. The party has formally filed court papers in the South Gauteng High Court against CoJ, Joburg Water and the executive mayor of the city.

According to the party, the litigation is prompted by years of accelerated infrastructure collapse, a lack of maintenance, chronic water outages and the failure to act with the urgency required to protect residents and businesses.

Wayne Duvenage is the CEO of the Organisation Undoing Tax Abuse [Outa]. We are in an election year at local government level at least, Wayne.

So perhaps it is worth noting that this conversation is to purely look at the investment case of Johannesburg and, to that end, and if you are in a room full of investors making a case for the City of Johannesburg as an investment destination, what do you describe as the current state of play? Is this a financially viable city?

WAYNE DUVENAGE: Look, it’s going to be very difficult for anybody to convince investors that it is viable to invest here in the long run.

I think if a lot of people who had invested here 10 years ago knew the current situation would be as bad as it is, they probably wouldn’t have invested – and that says a lot.

So if you are about to invest in a city like Johannesburg now, you’ve got to ask yourself, why would I do so on the back of failing infrastructure, of roads that are not maintained, traffic lights which are creating a lot of chaos when it comes to productivity – getting people to and from work – and where there’s an unreliable supply of water and electricity.

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It just doesn’t make for good sense from an investment point of view, and it shouldn’t be that way. It shouldn’t be the case because it has the potential to continue to grow as an investment destination or hub.

But the investors need reassurance that this is going to change right now.

In the current political environment – because it does come down to politics – it doesn’t look good and we need some certainty and hopefully that does play out in this electoral process at the end of the year.

DUDUZILE RAMELA: And if you are asked by an investor in the same room about this being quite a gloomy state of play, what do you put it down to, especially when you mention a lack of maintenance, infrastructure collapse, et cetera. Is it a lack of money or a lack of management – or a mixture?

WAYNE DUVENAGE: Well, it’s not really a lack of money. It is a lack of management; it’s a lack of expertise. It is a city that has been run by individuals and entities who are being politically meddled with, who do not have the ability of foresight to plan, and the vision for a city that works for its people.

It is a city that has lost its way, quite frankly, when it comes down to managing its funds, and dealing with corruption and maladministration.

For instance, if you had 10 years ago a collection rate of 95% and that’s dropped to 85% – which is what the situation is – that comes down to leadership, it comes down to systems, it comes down to how you collect your funds, how you deal with the theft of electricity and water.

If you don’t want to hold people who fall short of their roles and responsibilities to account, to get the professionalism to the levels that are expected of a city like this, then I’m afraid you are going to fail. And that’s exactly what’s happened.

It’s a leadership issue. You can run the city on R85 billion to R90 billion a year’s income. You just have to make sure that every rand you spend is a rand well spent – and that’s not been the case. That comes down to leadership.

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DUDUZILE RAMELA: What then, do you say to another investor in the same room who says: ‘I have quite the risk appetite. Maybe I won’t go to the central business district with this – not that many businesses are left – but I will maybe move on up because if you go to the likes of Rosebank you see some buildings that are rising, and you go to the likes of Sandton, Illovo, et cetera.’

And so where should I rather place my money – even more when you tell me that this is something that can only be sorted out by politics.

WAYNE DUVENAGE: Yes, sadly it does come down to how the politicians drive the administration of a city.

It’s no secret that political interference and meddling get in the way of administration, and that’s the biggest problem.

Now, of course, there are good pockets and good places in the city of Joburg, but these are not islands. They are not cut off. They are part of the city and the entire city’s infrastructure.

It may look good now, but if funds are not going to flow properly to where they should, it’s going to fail in time. The potholes are just as big in Rosebank in certain areas, as they are in another part in Randburg.

So it’s a Catch-22. There are reasonable places and areas you should and can invest in, but you’ve got to look at the whole picture when it comes to a city like Johannesburg.

DUDUZILE RAMELA: Fair enough. Wayne Duvenage is the CEO of the Organisation Undoing Tax Abuse.

#Joburg #financially #attractive #Moneyweb