Big business commits to fixing the City of Joburg

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JIMMY MOYAHA: We’ve been going back and forth for a couple of weeks around the City of Johannesburg and its financial state. We have debated whether or not the city is in trouble, whether or not we are on top of things. Following today’s statement, I think there is a lot that needs to be looked at in that respect.

Read: Business warns Joburg crisis risks South African recovery

There was a statement put out, a joint statement at that, by Business Unity South Africa, Business Leadership South Africa [BLSA], as well as Business for South Africa’s steering committee, taking a look at the City of Johannesburg and the fact that businesses are committed to ensuring that we can get the city back on track.

We’re going to be taking a look at this in more detail with the chief executive officer of Business Leadership South Africa, Mme Busi Mavuso. She joins me on the line now to see what we make of this.

Mme Mavuso, always lovely having you on the show. Thanks so much for taking the time. Johannesburg, accounting for 16% of South Africa’s GDP, echoes the sentiments by the electricity minister that it is certainly too big to fail.

The situation that the City of Joburg finds itself in at the moment – how dire is the situation?

BUSI MAVUSO: The seriousness of the situation – exactly. So I think the core message in all of this, Jimmy, is that Joburg to me is not just a local municipality in difficulty. It is South Africa’s commercial capital, a major contributor to national GDP.

Seventy percent of the head offices of this country are in the City of Joburg. It contributes about 16% to the national GDP and is the place where many investment decisions are made. Jobs, investor confidence, residents and businesses all pay the price.

So this is precisely why business is choosing to raise its hands and say, we’re actually ready to assist the city of Joburg in whatever shape, form or way that would be required.

This is a national economic issue. We are worried about the fact that we have had all of these institutions who have actually raised the alarm on the City of Joburg.

The Auditor-General has registered doubt about the city’s ability to continue as a going concern. The Minister of Finance, Jimmy, is actually saying we are going to place you – or rather, he has already placed the city on formal notice.

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The adjustment budget is unfunded. The city is in severe financial distress, and [Treasury’s] July equitable-share instalment is at risk. Eskom may suspend electricity supply over the unpaid debt. The infrastructure renewal backlog across Joburg Water, City Power and the Johannesburg Roads Agency alone exceeds R185 billion.

Read: CoJ finances ‘a horror show’ – Scopa member

So this isn’t just a city struggling at the margins.

It is really a national economic crisis.

JIMMY MOYAHA: Mme Mavuso, let’s take a look at the role that business plays here. What we’ve seen as a country is we are able to put politics aside for the greater good. We’ve seen an increase in public-private partnerships, we’ve seen commitments that have been followed through from a business perspective.

What is business committing to do here to get the city back on track?

And what does business need from the other stakeholders that come to the party here?

BUSI MAVUSO: The very clear thing that business would need as business is a credible, committed counterparty on the other hand.

Because remember, the business-government partnership that we’ve had for quite some time now is premised precisely on that.

The reason why we’ve managed to crack the electricity crisis, the reason why you’re seeing improvement on the transport and logistics, is precisely because there is clear sponsorship [by the private sector] and support from the president.

We have engagements every eight weeks. We actually are very clear in terms of what needs to be delivered. There are very clear deliverables that are actually assigned, and people are responsible for delivering on those deliverables. If they don’t deliver, then it’s escalated to the president. And we’re very clear about what are some of the impediments and challenges and blockages that actually need to be dealt with.

So that is precisely what we’re calling for here.

If this can operate under the direct auspices and championship of someone who is accountable, with committed counterparties who are decision-makers, people who are aligned on their objectives and ambitions, people who have agreed a critical path, the marshalling of the political will, the resources that are required to implement we just need clarity.

Otherwise, we’re not going to get involved; if there isn’t that commitment on the other hand.

JIMMY MOYAHA: Mme Mavuso, let’s take a look at the impact this then has on the broader South African economy. We alluded to the fact that this city accounts for 16-18% of national GDP.

But can we look at the ripple effect that starts to happen if we can fix this and get this right – and we can then start to apply some of these learnings to other municipalities, to other cities, to other metros, and effectively to the South African economy at large?

BUSI MAVUSO: If Joburg works then the entire economy and the entire country works.

If Joburg succeeds, then you have all of these businesses that are actually operating from Joburg who also prosper.

If Joburg works then the complaints that we have been getting from the residents around the water, around the electricity-supply issues, around the infrastructure that is decaying, around potholes [will cease].

Listen/read: Mr Mayor, in what city do you live?

The insurance companies are actually saying we are spending a lot of money in terms of claims, because the roads are not being maintained – and so forth and so on; all of that.

So that money that is actually being spent on other things could actually be spent in the economy. We could be hiring more people. I think that is really what is at stake here.

A lot of businesses cannot continue to carry that which government is supposed to do, because at this point it looks like double taxation.

We are paying rates and taxes – the biggest taxpayer in the City of Joburg is the business community. And yet we have Discovery and Hollard who still have to fix potholes.

We have OUTsurance, who is hiring millions – [or] probably thousands – of young people who have to man the traffic lights because otherwise it becomes a disaster to try and move around Sandton without those OUTsurance people.

So we’re just saying it’s time to fix this problem once and for all.

We cannot continue to allow businesses to carry a load and a burden that is not theirs to carry in the first place.

JIMMY MOYAHA: Fixing the City of Johannesburg is going to take a concerted and coordinated effort.

The business side of things, the private sector, is certainly ready, willing and able to assist. They need the other side of the conversation to come to the party and do their part so that we can fix this city and fix this economy of ours.

We’ll leave the conversation on that note. The chief executive officer of Business Leadership South Africa, Busi Mavuso, joined us to take a look at the joint statement they put out alongside Business Unity South Africa and Business for South Africa’s steering committee on how we get the City of Johannesburg back on track.