South Africa

Post Zuma: Picking up the pieces – let the cities lead the way

By Dirk De Vos 30 June 2017

The multiple problems that have piled up are just too large and intractable to be addressed on a national level. By DIRK DE VOS.

Towards the middle of 2019, all things going reasonably well, South Africa would have elected new national and provincial governments. It is hard to predict the likely outcome of the 2019 election, but based on previous elections, including the 2016 local government elections, it is unlikely that the ANC will drop below 50% of the national vote – whatever leadership emerges after December’s elective conference vote. Perhaps the only thing that could change the political outcome is a split within the ANC itself.

There are several good reasons why a big split in the ANC won’t happen. There is that well-known refrain, “It’s cold outside the ANC.” What that really means is that since 1994, the almost total political dominance of the ANC and the lack of a credible opposition has meant that there has been no effective check on the organisation. In turn, there has been an increasing blurring of the lines between the ANC, as a political party, and the state. One consequence of this has been the unchecked growth of patronage politics. Controlling the R1.3-trillion budget that flows downwards to a large and well remunerated public sector using “cadre deployment” gives the politically connected salaried positions in government. It also supports a large social grants system which binds many, particularly the poor and unemployed, into the system. Control of the national Budget also allows for paying various public representatives as well as directing tenders and other forms of patronage within the state and the parastatal sector. The ability to dispense patronage is described as part of the adhesive that has kept the ANC together.

On the other hand, while it might be cold outside the ANC, for reasons related to patronage politics, it has been getting extremely hot inside the ANC. One study estimated that as many as 450 political assassinations occurred in KwaZulu-Natal between 1994 and 2014; other studies give other estimates. Very few of the perpetrators of these political killings, often between rivals within the ANC, are apprehended, much less brought to court.

The capture of the state by the Guptas described in the former Public Protector’s State of Capture report, the Betrayal of the Promise report compiled by the Public Affairs Research Institute (PARI), the South African Council of Churches’ Unburdening Panel Process, the massive email leaks and the OUTA particulars of claim are just the recent evidence of a process already long under way. Some of this is described in a 2014 PARI research paper called The Contract State. It details how basic government services or what we call state capacity is contracted out to third-party providers. In doing so, the ability of the public sector to do anything is severely reduced and as a result corruption and clientelism have flourished. There is no better example of this process than the recent Sassa/Net1 social grants payment debacle that played out to the horror of South Africans earlier this year in the Constitutional Court.

Growing state incapacity, the result of many years of patronage politics that predates the Zuma administration, is in of itself anti-poor. Leaving aside any political or economic ideology, a state that can effectively collect taxes and use them to provide the most basic needs is inherently redistributive. For South Africa, state incapacity has serious constitutional implications as well.

By the time 2019 comes around, the main opposition to the national government then in power will probably not be its political opposition. Instead, it will be our economic reality created by the sabotaging of the economy, falling tax receipts, increased unemployment, emigration of those with essential know-how, and escalating government debt servicing costs compounded by failing and hugely indebted State-Owned Enterprises, especially Eskom. If local currency debt reaches junks status by then, it will all be much worse because foreign bondholders will need to get out of South African currency debt. The government won’t be able to raise new debt to fill in revenue shortfalls and interest rates will shoot up for everyone. None of the existing economic policies, including the NDP, can turn things around, because these policies rely on a capable state machinery. We simply don’t have that. Instead, we have a grossly inefficient state and one which is very expensive to maintain.

Any constitution is the outcome of several local factors including a country’s history. However, constitutions are also a result of the prevailing ideological framework at the point that a constitution is drafted. Examining our own Constitution, we can see how it was drafted at a time when new conceptions of the full content of human rights had emerged. Many South Africans say that we have the best constitution in the world. What they probably mean is that, at least as far as the Bill of Rights is concerned, ours is the most expansive constitution in the world. It builds on the first generation rights (more recently referred to as blue rights) contained in most liberal constitutions, guaranteeing freedom of expression, due process and political participation and protecting citizens against excesses of the state. It also incorporates second generation rights (also referred to as “red rights”), legal rights that emerged after the Second World War and deal with economic, social and cultural rights. These impose an obligation on the state to provide certain things within its means such as basic housing and education, to secure labour rights, and ensure that citizens do not go hungry or remain untreated if they are sick. It also includes third generation rights (or green rights) and includes issues such as self-determination, the right to development, rights to natural resources and rights to satisfactory environment.

Moreover, our Constitution goes further: it makes enforcement of constitutional rights not just by citizens against the state (vertical application) but between citizens (horizontal application). Other issues reveal its vintage. Take Reserve Bank independence for example. Our Constitution deals explicitly with the Reserve Bank and enshrines its independence. Very few written constitutions deal with central banks and the idea that central banks be independent from political control is relatively recent. The Bank of England, the second oldest central bank, only became independent from political control in 1998 – and then only through an act of the UK parliament.

Of late, there has been sharp analysis of what has gone wrong politically and how we could go about repairing the damage. But many of the proposals require large-scale solutions such as turning around our largely dysfunctional educations system, pacts between, say, government, business and labour or other stakeholders. This all requires, as Professor Adam Habib says, “nuance and pragmatism without compromising on the principle of social justice”. The problem is that it all requires sound leadership and massive buy-in. We simply can’t proceed on this assumption, the politics needed for any of this seem distant from our grasp.

Perhaps our Constitution, mostly seen as a check against the worst excesses, is itself part of how we have got here. As Richard Poplak points out, one of its fundamental weaknesses is that it invests too much power in the executive and especially in an indirectly elected executive president. The other weakness is the failure of the different spheres of government, national, provincial and local, to function effectively on a co-operative basis. This problem was explored in a paper entitled Promises Unmet – Multi-level Government in South Africa by legal academics Christina Murray and Richard Simeon. As those authors show, the imposition of provinces that did not exist before 1994 was the result of negotiations for a peace settlement rather than of a careful analysis of the costs and benefits of decentralisation, including bringing government closer to the people and the virtues of competition that federalism can bring.

The slightly ad hoc nature of our multisphere system of government can be seen in the way that variously concurrent and exclusive competencies set out in schedules 4 and 5 are allocated between national, provincial and local governments. They do not appear to have been allocated to the each sphere of government with much thought. The Murry and Simeon paper describes why our multisphere system of government has not worked. These include the ANC’s ideological position of centralising and its reluctance to have competing centres of power, the lack of capacity, both legislative and bureaucratic, within the provinces and then the issue of intergovernmental capacity or “the ability of all the units and levels to co-operate and co-ordinate their activities in ways that maximise service delivery and minimise pointless battles over turf, blame avoidance and credit-claiming”. While the Constitution requires co-operative governance, the relationship between the different spheres is a paternalistic, centrally dominated process. The authors are not optimistic about the future either. They say that should opposition parties win power at provincial level, the system would become a great deal more difficult to operate. It is not all bad though – while the recent Auditor-General’s report on local municipalities shows that large numbers of them are entirely dysfunctional, the position of the metros and some of the larger secondary cities with their much larger budgets is much less bad. Some of them are actually rather good.

It is in our cities where the genesis of picking up the pieces could start. Already, 40% of all South Africans live in the five largest metros and these cities produce nearly 60% of the country’s economic output (measured as gross value-add). More South Africans are moving to urban areas. The National Development Plan estimates that by 2030, South Africa will have a 70% rate of urbanisation, with most growth in the largest metros. However, the budgets that city governments control is less than 20% of the national budget. A large portion of the functions that one would expect to be city functions such as policing, housing, transport, public servant wage setting and conditions of employment, schools, water affairs, ports are in fact national and, to some extent, provincial, competencies.

Although not following the rather arbitrary scheme set up by the Constitution, pushing key national and provincial functions down to city level is technically possible. Our current intergovernmental relations process provides a precedent. Besides what the Constitution requires, several pieces of legislation such as Intergovernmental Fiscal Relations Act, the Intergovernmental Relations Framework Act and several intergovernmental bodies including the President’s Council already exist.

The starting point for such a scheme would be any metro with an unqualified audit with just a limited number of findings. Under the executive mayors of these metros, national and provincial governments could, by agreement, agree to exercise those functions that a metro requires under the formal oversight of the executive mayor. Politically, this idea is more feasible than it first appears. The national and provincial powers or functions exercised under city mayors would not be a delegation or a cession which is probably unconstitutional but an agreement to exercise those national or provincial functions under the overall management of city government. In this way, the cities become a series of mini-governments of “national unity”. The party winning the national or provincial elections, more than likely the ANC, gets to participate again in city government via its retained political control of the national and provincial functions exercised, by agreement, under the day to day management of city government. If there is misconduct on the part of city management or a breach of the agreements, then these national functions could be yanked away again.

Further, if the “equitable share” fiscal arrangement is reformulated by allowing cities to retain some share of any increase in VAT or income tax collected from within the metro concerned, then a gentle but real dynamic of competition between cities is established as they chase new business and investment in pursuit of these tax revenues. Different policies pursued by different cities could then also serve as R&D labs for what policies or implementation protocols work best and these then can be extended to the national sphere. Secondary cities, should they get their acts together, might also qualify to have certain national and provincial powers drawn down in this way – provided they too show a capability to manage what they already do via a favourable Auditor-General report and a workable, realistic Integrated Development Plan.

None of this should suggest an abandonment of rural areas, but as the Auditor-General’s recent report shows, completely different interventions are required. Rural South Africa presents a different order of problem that can probably only be solved by the centre.

The reality of our situation is this. By 2019, South Africa’s problems of poor and more recently, criminal-type governance, will mean that whoever gets to form the national government will have to pick up the pieces. The multiple problems that have piled up are just too large and intractable to be addressed on a national level. If the National Development Plan depends on a capable state, then our large cities might be the only vehicles we have to shore up the damage and rebuild something resembling a capable state. From there, who knows? With a good deal of luck, we might even stand a chance of building something better. DM

Photo: President Jacob Zuma (Greg Nicolson / Daily Maverick)

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