logo
‘No problem,' says Joburg as R1bn tender goes to officials' families or friends

‘No problem,' says Joburg as R1bn tender goes to officials' families or friends

Daily Maverick3 days ago

The City of Johannesburg defends the award of massive transport contracts to politically connected families, despite concerns from the Auditor-General and civic watchdogs
A week after Auditor-General revealed that the City of Johannesburg had awarded R972-million in dodgy family-linked tenders, city spokesperson Nthatisi Modingoane has confirmed that the metro government sees no problem and will not investigate.
Six awards (or contracts) valued at almost R1-billion were made to the family of either a city official or councillor for the extension of the BRT/Rea Vaya bus system in 2023. The extension of the city transport service is eight years behind schedule, and a final deadline for the end of 2024 was also missed.
'There is no regulatory provision that prohibits the Municipality to award contracts to the category of people in question (spouse, child or parent of a person in service of state either actively or in the past twelve months). Therefore, the question whether the City failed in oversight and due diligence is misplaced,' said Modingoane.
The Auditor-General has a different view.
'Although there is no legislation that prohibits municipalities from making awards to suppliers in which close family members or business associates of employees or councillors have an interest, such awards create conflicts of interest for these employees or councillors and/or their close family members or business associates. The possibility of undue influence cannot be discounted, especially if the person could have influenced the procurement processes for these awards, potentially creating opportunities for irregularities.'
While Modingoane confirmed the awards were made for the BRT/Rea Vaya extension, he would not provide further details. He said the connected council official had not sat in on the award decision.
Asked if the award would be rescinded or investigated, Modingoane said, 'To rescind such an award will be unlawful and the Municipality will be exposed to litigation risks as a result'. He said that the transactions had been disclosed in the city's annual financial statements as required by law, and no further investigation was necessary.
BRT-Rea Vaya veers off track
When cities commit to ending spatial inequality (which means that poor black people live on the outskirts while the middle and wealthy classes live in the city near opportunities and amenities), there are two ways to do so: provide transport for workers to get to economic opportunities or increase social housing near jobs.
In Johannesburg, the rapid bus transport system was an innovative idea to mediate apartheid planning by making it cheap, easy and fast for workers living on the city's outskirts to go into town, to where they worked, or to get around.
The city, which began as a gold mining town, was built along the ultimate apartheid master plan. Black people were housed in dormitory towns and suburbs far out of the white city in enclaves easily controlled by security forces if they resisted – the violent response to the 1976 student rebellion was the obvious example of how it worked.
The BRT/Rea Vaya incorporates the taxi industry and co-owns two companies that run the system, PioTrans and Litsamaiso. The city pays BRT/Rea Vaya for trips made. The system has not been without conflict, especially with PioTrans.
Its expansion to the north (the so-called Phase 1C) of the project has fallen prey to serial infrastructure and leadership weaknesses that beset local government, which Maluleke highlighted. The city has expanded north, and job opportunities are increasingly available in the new nodes. Phase 1C would almost double the number of buses and take people to where the opportunities are.
But new stations lie dormant as delays have repeatedly impacted on roll-out. The weaknesses include corruption (as the R972-million contracts suggest), institutional capacity, effective project governance, ineffective planning, procurement and contract management weaknesses and a lack of accountability for poor performance.
Maluleke's report lays bare all these factors. Phase 1C is eight years behind schedule, and the Johannesburg Development Agency (JDA) missed a pledge to get it running by the end of 2024.
Daily Maverick regularly tracks the route to check, and progress is still far from complete. This detracts from the effort to end spatial inequality and get young people into jobs — Gauteng and Johannesburg have among the highest youth unemployment rates. Because it is subsidised, trips on the Rea Vaya are cheaper than other forms of public transport.
Intervention delivers little
Johannesburg is under soft intervention by the Presidency because of its rapidly collapsing infrastructure and services, but after 100 days, most residents say the impacts on the ground are imperceptible. In the past week, there have been multiday water cuts in the east of the city and power outages in the near west and across the inner city as underground fires roar through cabling.
Last week, Mayor Dada Morero launched a 'bomb squad' to help him improve city management.
MMC for Transport Kenny Kunene said, 'I have not heard anything about it (the R972-million dodgy tenders).' He said he would investigate and revealed that when he started his job in 2021, R23-million had been stolen from the BRT and officials had been suspended, but reinstated after the ANC intervened. He had ensured they exited as part of an anti-corruption plan, he told Daily Maverick.
Failing management
Johannesburg's audit outcome was unqualified with findings. (For context: the board of a private sector CEO of a company with a budget of R88-billion – Joburg's budget – would sack a CEO for this outcome.)
The city lost R2.9-billion in water and R4.93 billion in electricity. Auditors ensured city finance officials reduced fruitless and wasteful expenditure to R1.48-million in 2023/24. Over the past three years, this figure stood at R354-million. The AG said the quality of its submitted statements was poor, but good on publication after remediation. The quality of its performance reports was poor. The overall status of its financial controls was poor.
The BRT/Rea Vaya delays symbolise this failing management. The AG also found that 'The City of Johannesburg did not coordinate effectively with its entities. This was due to misalignment between the metro and its entities on expectations and plans, obligations, budgets and timelines for the successful delivery of key projects.'
The DA has lodged a formal complaint with the Special Investigating Unit over the R1-billion in awards to companies that are linked to current and former councillors, said its head of caucus, Belinda Kayser-Echeozonjoku.
'This shocking report paints a grim picture of a city where public money is seemingly treated as a personal piggy bank by those elected to serve it. At a time when Joburg's streets are crumbling, power outages are the norm and basic service delivery is in freefall, it is unacceptable that councillors may be benefiting from a broken procurement system.'
Risk is that nothing will be done – Corruption Watch
'The worrying thing is that it is a sizeable amount – it may be six officials (or six awards to one official) or their relatives who cost Joburg residents just under R1-billion.
'The official response is quite disturbing. The biggest risk is that nothing will be done, and another big transport infrastructure is threatened. Metro governments are regressing in terms of their reports to the Auditor-General,' said Moepeng Talane of Corruption Watch, who assesses all AG reports for the organisation.
'It's worrying and urgently needs the intervention of the provincial governments,' she said. DM

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

South Africa's rental market sees strongest growth as average rental stays above R9 100
South Africa's rental market sees strongest growth as average rental stays above R9 100

IOL News

time9 hours ago

  • IOL News

South Africa's rental market sees strongest growth as average rental stays above R9 100

The Western Cape continued to attract the highest average rent in South Africa at R11 285 despite a slight dip in growth from fourth quarter of 2024's double-digit figures to a robust 9.6%. Image: Freepik South Africa's residential rental market has kicked off 2025 with a remarkable performance, showcasing the best results in several years. According to the latest PayProp Rental Index, average national rental growth reached 5.6% in the first quarter of this year, marking the strongest quarterly increase since the third quarter of 2017 and pushing the average rent to R9 132. Notably, February saw a staggering year-on-year rental increase of 6%, the highest monthly growth recorded since August 2017, indicating a burgeoning recovery in the sector. This impressive rise comes alongside a favourable inflation landscape as the Consumer Price Index (CPI) inflation fell from 3.2% in both January and February to a low of 2.7% in March. The resulting gap between rental growth and inflation is significant—standing at 2.8% in both February and March—denoting the most marked real-terms rental gain witnessed in the current growth cycle. Landlords are beginning to reclaim losses incurred during previous market slowdowns, spurred by a surge in tenant demand and broad positive growth across provinces. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ In contrast to what has been witnessed in previous years, the first quarter of 2025 did not present the usual seasonal spike in rental arrears. The proportion of tenants reported in arrears actually dipped slightly to 17.0%, matching the record low previously established in the fourth quarter of 2023. 'After last year's first-quarter arrears spike, this stable start to 2025 is encouraging,' said André van Rooyen, head of sales at PayProp. 'That said, with rents rising quickly, it's vital for agents to recheck affordability at lease renewal and make sure tenants can afford escalations.' Despite inflation figures staying subdued, rising electricity tariffs and fuel prices pose potential threats to the overall affordability of renting as the year progresses. Even amidst strong overall demand, nearly 80% of rental agents surveyed in PayProp's latest State of the Rental Industry reported highlighted affordability concerns as a primary driver behind tenant relocations. Currently, the rent-to-income ratio remains manageable at 28.8%, comfortably below the recommended threshold of 30%. Nonetheless, owners of high-end properties may need to strategically adjust their pricing to avoid narrowing their tenant pool excessively. The performance across provinces has been mixed, with some regions soaring ahead while others lag behind. Limpopo continued to shine as one of the fastest-growing markets, recording a stellar 10.9% increase in rents. This surge brought the province's average rent to R8 899, solidifying its position ahead of Mpumalanga and amplifying its influence in the rental landscape. The Free State made a strong comeback, more than doubling its growth rate from the fourth quarter of 2024 to a brisk 7.6%, with average rents now reaching R7 453, allowing it to surpass the Eastern Cape. In contrast, Gauteng and Mpumalanga appeared to be facing challenges. Gauteng's rental growth fell to just 2.9%, the weakest in over a year, raising eyebrows regarding its ability to retain its third-place rank for average rent, which currently stands at R9 201. Mpumalanga showed slight growth at 1.1%, yet it remained the lowest in the country, with a mere R91 increase year on year. Meanwhile, the Western Cape continued to attract the highest average rent in South Africa at R11 285 despite a slight dip in growth from fourth quarter of 2024's double-digit figures to a robust 9.6%. KwaZulu-Natal showcased steady growth at 4.5%, and interestingly, it now sits just R31 behind Gauteng, making it one to watch in upcoming rankings. Northern Cape has emerged positively, with rents rising 3.3% following a lacklustre 2024, while the Eastern Cape showed a modest bounce back to 4.4%, though still retaining the honour of the country's second-lowest average rent. As the economy moves into the next quarter, the data revealseda market filled with potential but also considerable challenges. 'As we enter the next quarter, the data signals a market with real momentum – but also real challenges,' said van Rooyen. 'While landlords and agents are benefiting from stronger demand and healthier returns, it's critical that we remain focused on tenant affordability and long-term sustainability.' BUSINESS REPORT

Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries
Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries

IOL News

time9 hours ago

  • IOL News

Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries

IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Image: Ai If you invested R1 000 in FirstRand shares five years ago and reinvested all dividends (excluding the effects of inflation), your investment would now be worth about R2 378. This includes both share price appreciation and the compounding effect of reinvested dividends. That gain, of R1 378, is the equivalent of a quarter of the cost of an average food basket, based on May figures from the Household Affordability Index, published by the Pietermaritzburg Economic Justice & Dignity Group. The Group's report indicated that the national minimum wage in May, based on 21 working days, is R4 836. The average cost of a household food basket, in the same month, is R5 466. The Pietermaritzburg Economic Justice & Dignity Group's food basket tracks 44 basic food items, including a range of essentials like maize meal, potatoes, tomatoes, bananas, and various other fruits and vegetables, as well as staples like bread and milk. IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Overall, dividends earned and reinvested over the period contributed an additional R593 to your investment value. This calculation is based on a five-year share price increase of about 78.7% and an average annual dividend yield of roughly 5.9%, with dividends reinvested each year. In contrast, the JSE's All Share Index has climbed some 81% over the same period. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Dr Azar Jammine, director and chief economist at Econometrix, pointed out to IOL that the Index was worth some 7 000 points at the turn of the century and is now heading towards 100 000. FirstRand started out as FNB, which claims to be South Africa's oldest bank. Its history can be traced back to the Eastern Province Bank formed in Grahamstown in 1838. Initially the Eastern Province Bank, FNB was established in Grahamstown and initially focused on financing the wool export boom in the district. It later hit a wobble and was acquired by the Oriental Bank Corporation in 1874, which was later bought out by the Bank of Africa in 1879. IOL

Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries
Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries

IOL News

time9 hours ago

  • IOL News

Proceeds from a 5-year R1,000 investment in FirstRand shares is now worth 25% of groceries

IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Image: Ai If you invested R1 000 in FirstRand shares five years ago and reinvested all dividends (excluding the effects of inflation), your investment would now be worth about R2 378. This includes both share price appreciation and the compounding effect of reinvested dividends. That gain, of R1 378, is the equivalent of a quarter of the cost of an average food basket, based on May figures from the Household Affordability Index, published by the Pietermaritzburg Economic Justice & Dignity Group. The Group's report indicated that the national minimum wage in May, based on 21 working days, is R4 836. The average cost of a household food basket, in the same month, is R5 466. The Pietermaritzburg Economic Justice & Dignity Group's food basket tracks 44 basic food items, including a range of essentials like maize meal, potatoes, tomatoes, bananas, and various other fruits and vegetables, as well as staples like bread and milk. IOL's calculations show that, without reinvesting dividends, your shares would be worth about R1 785. Overall, dividends earned and reinvested over the period contributed an additional R593 to your investment value. This calculation is based on a five-year share price increase of about 78.7% and an average annual dividend yield of roughly 5.9%, with dividends reinvested each year. In contrast, the JSE's All Share Index has climbed some 81% over the same period. Dr Azar Jammine, director and chief economist at Econometrix, pointed out to IOL that the Index was worth some 7 000 points at the turn of the century and is now heading towards 100 000. FirstRand started out as FNB, which claims to be South Africa's oldest bank. Its history can be traced back to the Eastern Province Bank formed in Grahamstown in 1838. Initially the Eastern Province Bank, FNB was established in Grahamstown and initially focused on financing the wool export boom in the district. It later hit a wobble and was acquired by the Oriental Bank Corporation in 1874, which was later bought out by the Bank of Africa in 1879. IOL

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store