The Financial Sector Conduct Authority (FSCA) is investigating Johannesburg mayor Kabelo Gwamanda for allegedly having operated a Ponzi-like funeral scheme called Ithemba Lama Afrika.

Ponzi schemes collect money from the public but collapse when claims can’t be honoured.

If the FSCA investigation, confirmed on 19 June by Daily Maverick, shows Gwamanda was involved in such a scheme, he will have to quit and the city will prepare for its sixth mayor since the 2021 local government elections.

The graphic below shows that Johannesburg has been rocked by instability since the coalition government was installed at scale across Gauteng’s major cities of Johannesburg, Pretoria (Tshwane) and Ekurhuleni.

Johannesburg’s experience is a microcosm of what could happen after the 2024 national and provincial elections if coalition formation and government aren’t reformed. The city is in polycrises, with electricity and water cuts now common enough to no longer make headlines: they have become normalised.

What has been clarified for analysis is a populist form of government, short term in intent and biased towards political entrepreneurs like Gwamanda.

“Johannesburg cannot be led by someone who is an alleged fraudster as his strings are pulled to control an R80.9-billion budget by the ANC and EFF,” said ActionSA chairperson Michael Beaumont.  

“ActionSA has already submitted a motion of no confidence against Mayor Gwamanda on the basis of these serious allegations.” 

The DA, which has 71 seats (the second highest after the ANC’s 91 seats against a total of 270 seats), will support a no-confidence motion.

“The mayor’s political party has consistently told the public that they have vetted him. The ANC has said they publicly vetted him. No vetting had been done on Mayor Gwamanda by all the political parties currently keeping him in office,” said DA Johannesburg caucus leader Belinda Kayser-Echeozonjoku.

“Mayor Gwamanda was not truthful and avoided answering questions after the State of the City Address because he was afraid the issue of the funeral scam would come up.”

The rise of political entrepreneurs

The ANC and EFF are playing a brinkmanship game in the three Gauteng cities ahead of the 2024 elections. The EFF will not support handing the mayoral chains to ANC mayors as it holds out for more considerable spoils post-election, which means minority party members become mayors.

This has given rise to political entrepreneurship characterised by small-time politicians like Gwamanda and former mayor Thapelo Amad who resigned hours before a motion of no confidence in him was to be heard. 

Politicians of their ilk get into politics by cultivating small political constituencies, winning local elections and negotiating their way to prominent patronage positions using populist street smarts. Both hitched their wagons to the Al Jama-ah party.

Political competition in small parties is less intense than in big parties like the ANC and DA and is a shortcut to position and patronage opportunities. 

In 2024, with the fracturing of the political landscape into smaller and smaller parties, this patrimonial politics will see landscapes like Gauteng’s three big cities become a trend.

Johannesburg also shows that the ANC-EFF alliance is crystallising as at least a provincial and local certainty, if not a national one. ANC secretary-general Fikile Mbalula said the EFF is the governing party’s natural ally. The two will likely build coalition governments with small parties like Al Jama-ah.

In minor parties like Al Jama-ah, candidates are drawn from a shallow pool and don’t go through the vetting processes or political schools that ANC, DA, EFF and ActionSA candidates do. This means that in coalition governments, the ability of entrepreneurial and populist young hustlers to get to the top is made easier. Because vetting is skipped, the opportunity for instability and scandal is higher.

Amad caved in during questioning by the SABC’s Sakina Kamwendo, admitting to negotiating usurious loans for the city (illegal in terms of the Municipal Finance Management Act). Gwamanda is facing a financial watchdog investigation.

“The FSCA confirms it is investigating complaints received about Ithemba Lama Afrika and Mr Kabelo Gwamanda, the Mayor of Johannesburg. The FSCA emphasises the existence of an investigation should not be construed as a statement that any person has contravened a financial sector law,” it said in a statement.

Coalition governments are unstable

The experience of the coalition government in Johannesburg is that it has led to near government failure, not only under Gwamanda’s Government of Local Unity but also under the DA-led administration of Mpho Phalatse. 

When coalition governments are installed in Johannesburg, the first thing they do is make political appointments to City Power, Johannesburg Water, the Johannesburg Property Company and the Johannesburg Roads Agency. Half of the city’s staff complement of more than 40,000 people are employed by these entities, and much of the spending happens here.

Coalitions are even more patronage-based than majority governments. The constant chopping and changing of staff and boards destabilise the city government. The road travails of the city are one example; City Power is another. Phalatse’s government appointed the roads agency CEO, who ran amok in a portfolio run by ActionSA.

There are thousands of entities across government and they are the first stop for cadre deployment, a trend across parties and not restricted to the ANC, as the experience of Johannesburg’s coalitions has revealed.

There are no hard and fast rules about which parties are good at coalition governance and which are not. For example, the Patriotic Alliance’s Kenny Kunene, in charge of transport in Johannesburg, is a steward, winning respect in a challenging portfolio.

But he is an exception, along with one or two EFF members of the mayoral committee.

Overall, politicians in city coalition arrangements run the government through campaigns rather than policy and process, because they provide an opportunity to build political brands. Campaigns are more straightforward than the arduous work of budgeting and governing through administrations that have been ground down through too many changes. 

From 2024, as coalition governments look like more and more of a certainty, government by campaign will become more of a populist trend, with long-term effects on stability, effective budgeting and service delivery. 

The constant use of motions of no confidence to eject mayors is unworkable nationally. If Johannesburg were South Africa, the country would have had five presidents and counting in less than two years. 

The DA is putting together three pieces of draft legislation to stabilise coalition governments, the party’s chief whip in Parliament, Siviwe Gwarube, told Daily Maverick. 

“We’re looking at international best practice by, for example, putting in place thresholds.”

This means that parties would have to achieve a threshold of 2% of the vote to be in a coalition government: Al Jama-ah, for example, has three seats in Johannesburg.

Gwarube says they propose to limit the weaponisation of motions of no confidence.

“The instability of removing presidents at a whim is unsustainable,” she says, adding that the law needs to change to increase to 30 days (from 14) the time it takes to negotiate coalition governments and arrangements.

The alternative is that coalitions, built on fragile foundations, fold at the first sign of pressure. 

193 BCE was the Year of the Five Emperors when five men claimed the title of Emperor in Rome. And 2023 is shaping up as Johannesburg’s year of the four mayors if the current coalition trajectory continues. DM