Real challenge facing ANC: Losing control to DA/EFF of R130bn Metro Budgets

In his masterful book How Long Will SA Survive, Rhodes Scholar and former Oxford University professor RW Johnson explains how the real objective for the country’s politicians is control of financial resources. He who owns the budget, gets the power to dispense largesse and thereby create the kind of patronage network evident today in the country. So the really big breakthrough in last week’s municipal elections was the way voters potentially removed the ANC’s control over how to allocate up to R130bn in spending by metros. Allied to this is the way the ANC believes it will rule indefinitely, with little consideration given to democracy’s ultimate reality of political power changing hands. So the challenge of securing new alliances to protect what it has is fresh territory. The next week is sure to prove pivotal for an ANC which has no discernible way of dealing with the consequences of the hammering the electorate gave it last week. – Alec Hogg

By Amogelang Mbatha

(Bloomberg) — South Africa’s governing African National Congress could lose control of more than 130 billion rand ($10 billion) in city budgets as political parties negotiate coalitions to govern four of the country’s biggest municipalities, including the capital, Pretoria, and the economic hub, Johannesburg.

Johannesburg_CBD_Feb_2016

The ANC’s support dropped to 54.5 percent in the Aug. 3 local government elections from 62.2 percent in a national vote two years ago, its worst performance yet. It was relegated to the second-biggest party in the capital, Pretoria, where the Tshwane municipality oversees about R30 billion of spending, and Nelson Mandela Bay, which includes the southern city of Port Elizabeth and manages about R11 billion, according to the cities’ budget documents. The party lost outright majorities in Johannesburg, which has estimated expenditure of more than R50 billion, and its industrial hub neighbour, Ekurhuleni, with a budget of about R40 billion.

“It’s a massive amount of money and it has ramifications in a whole range of areas,” Ivor Sarakinsky, a senior lecturer at the Johannesburg-based University of the Witwatersrand’s School of Governance, said by phone Wednesday. “All of these metros procure significant goods and services from private-sector companies and the supply-chain management systems that manage that procurement are going to be shaken up dramatically.”

Read also: Coalition insiders – DA offer to EFF: We want Joburg will give you Tshwane

Companies which previously won certain contracts might no longer have access to those public tenders, he said.

Disenchanted Voters

The ANC’s support fell as disenchanted voters fled to opposition parties amid increasing protests over a lack of services such as housing, water and sanitation, an unemployment rate of 27 percent and zero growth forecast by the central bank. This has opened the door for the Democratic Alliance to try form coalition governments in municipalities with smaller opposition parties, including the Economic Freedom Fighters.

The ANC won outright control in only three of the nation’s eight metropolitan municipalities, down from seven in 2011, while the DA increased its majority in Cape Town. While the DA and EFF have said they will work with other opposition parties to form coalition governments, both have said they won’t work with the ANC.

Read also: Silke: Coalition politics may shift SA ‘left’, dampen municipal election victory

“The money and the potential influence that goes with it is going to be a very important factor in the coalition talks,” Gary van Staden, an analyst at NKC African Economics in Paarl, outside Cape Town, said by phone on Wednesday. “It’s big money. To get your finger into that pie is certainly going to play a role.”

The rand weakened on Thursday to end a three-day rally that took the currency to the best levels since mid-October, boosted partly by speculation that the ANC’s loss of support will pressure the party to introduce economic reforms that will spur growth and cut unemployment.