Johannesburg is not poor, it is badly managed

Last week the Business Leadership South Africa (BLSA) council met to consider research on the state of Johannesburg, presented by Lael Bethlehem of Genesis Analytics. The findings were stark.

For a decade, during which the city has cycled through eight mayors amid deep political dysfunction, service delivery has collapsed, criminal syndicates have become entrenched, and revenue collection has deteriorated.

I was not surprised by the direction of the findings but I was struck by the scale of them. Recognising the growing challenges facing Johannesburg, I wrote to Premier Panyaza Lesufi to explore how organised business could support in addressing the challenges.

Read:
Johannesburg adds 700 managers as city struggles to pay bills
Johannesburg mayor quits amid infighting, financial turbulence
City in crisis: Civil society calls for Joburg mayor’s remova

Johannesburg is a national economic asset of the first order. The city is home to 70% of South African company head offices and produces 16% of national GDP. It is a critical hub for financial services, trade, retail and logistics.

When Johannesburg falters, the whole economy feels it. Organised business has made the city’s crisis an urgent national priority, and it is not difficult to see why.

I have raised the alarm directly. Sadly, there wasn’t even the basic decency to acknowledge my letter, let alone respond to it. Business Unity South Africa (Busa) reached out to Johannesburg mayor Dada Morero and that effort was also not successful. That silence is not acceptable.

ADVERTISEMENT

CONTINUE READING BELOW

As I have argued consistently, when business and government work together, we can achieve dramatic change; electricity stability and an improved logistics system are the most obvious fruits of that collective effort.

Read:
Johannesburg collapse risk spurs call for state to run city
Big business commits to fixing the City of Joburg
Business warns Joburg crisis risks South African recovery

We need to bring the same approach to Johannesburg. But to do that, we need a credible partner in the public sector: serious, capable politicians and officials who want to change things for the better. We cannot work with those entrenched in existing corruption networks or unwilling to make the effort to turn things around.

Resources undermined by mismanagement

The Genesis Analytics data makes clear why the challenge is so deep. Johannesburg is not under-resourced, in fact, it spends more per capita than any other metro, at R18 200 per resident per year, compared with the City of Cape Town at R14 230.

It also has the highest number of municipal employees per 1 000 residents at 8.5, against Cape Town’s seven and Ekurhuleni’s 5.6.

Yet despite this expenditure and staffing, the city loses more water through leaks and theft than Cape Town sells.

ADVERTISEMENT:

CONTINUE READING BELOW

It fails to recover payment for 21% of the electricity it buys from Eskom, lost to illegal connections and meter tampering. If those losses alone were brought to the national benchmark for comparable cities, the city’s budget crisis could be largely resolved. The problem is not resources; it is capture.

Read:
Joburg is losing R10bn a year to water leaks and crumbling infrastructure
300 days of power: Eskom’s recovery sparks hope for economy
Outa warns of potential court showdown to stop Eskom cutting Joburg’s power

Bethlehem’s analysis shows that criminal syndicates are embedded in the city’s procurement, budgeting and hiring processes, extracting value for personal gain at every point. This is the same dynamic that paralysed Eskom – and the lesson from Eskom’s turnaround is equally clear.

Until you deal with the corruption, you cannot turn around the operating performance of the institution. Johannesburg needs a dedicated policing effort, with specialised units tasked to the South African Police Service commissioner and the National Director of Public Prosecutions to investigate and prosecute syndicate networks operating inside the city. That is an essential first step.

Johannesburg is not poor; it is poorly managed. Fixing that requires stable and honest leadership, a focused effort to root out criminal syndicates, restored water and electricity services, and a credible financial recovery plan. It can be done.

We have seen major institutional turnarounds at Eskom and the South African Revenue Service – both looked irreversible until they weren’t.

ADVERTISEMENT:

CONTINUE READING BELOW

Johannesburg has faced crises before and emerged from them. Business is ready to support that turnaround. What we need now is a government partner willing to show up.

Read:
Clock is ticking as Godongwana gives CoJ new notice over funding cuts
Business welcomes Sachs appointment as reform momentum builds

30 June anti-immigrant protests

On a separate note: national protests are scheduled for Tuesday. People have the right to protest, and I respect that right. But the jobs and economic opportunities that protesters are demanding can only come from growth, and growth depends on the stability and investor confidence that violence and property destruction directly undermine.

The case for fixing Johannesburg, and for the broader reform agenda, is ultimately the same case: a working economy creates the opportunities South Africans need. Those who resort to violence and destruction of property damage that prospect and work against the very people they claim to represent. I hope Tuesday passes peacefully.

Read: SA braces for anti-immigrant shutdown on 30 June

#Johannesburg #poor #badly #managed