
‘No problem,' says Joburg as R1bn tender goes to officials' families or friends
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Asked if the award would be rescinded or investigated, Modingoane said, 'To rescind such an award will be unlawful and the Municipality will be exposed to litigation risks as a result'.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
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Daily Maverick
an hour ago
- Daily Maverick
Paying more, getting nothing — the Nelson Mandela Bay ward whose capital budget was slashed to zero
'I have been a ward councillor for 25 years and this has never happened to me,' said DA caucus chief whip Gustav Rautenbach. The capital budget for Lorraine and its surrounding suburbs — which makes up Ward 8 — has been slashed from R1.2-million to zero in the draft budget scheduled for discussion and a vote on Thursday. It is one of four DA-led wards in the metro that have been allocated no capital budget — and there is no mechanism for residents to appeal against the decision. The DA caucus chief whip, Gustav Rautenbach, said on Tuesday that there were rumours that the ward might still receive about R500,000 — but this had not been confirmed. Ratepayers are facing increases of 5% for property rates, 5.50% for water, 5.50% for sanitation and 6% for refuse collection, as well as a 12.8% increase in electricity prices if it is approved by the National Energy Regulator of SA. Last year, Ward 8 used its capital allocation to tar and repair part of Circular Drive, a major arterial road. But for the next year, Rautenbach said, there would be no capital allocation. 'It is very problematic,' he said, 'because this means that the Integrated Development Plan and the budget are not talking to each other. 'I think it is important to note that this doesn't mean that no potholes will be filled or no sewage spills will be fixed,' he said. 'That would come from the operational budget.' However, it does mean that no big new projects will be scheduled for the ward in 2025. 'We contribute millions to the municipal treasury,' said Rautenbach. 'Parts of this ward are old and must be replaced. How is that fair?' Lorraine has 122 townhouse complexes with around 3,000 houses, in addition to freestanding homes. 'I would say there are about 21,000 residents who live here,' said Rautenbach. Two of the main roads in the area, Dijon Road and Luneville Road, require major work. 'We don't even have an office,' said Rautenbach. 'We don't have a community hall, and we have no recreational facilities.' He said they had received only R100,000 for a humanitarian fund, like all other wards in the metro. Short-sighted 'This is very short-sighted from the municipality,' he said. 'Because it should be clear that the only direction in which Gqeberha can grow is in this westerly direction. 'I am very upset. Residents are making their contributions, and they are getting nothing.' Three other wards are facing the same outcome. However, Ward 41, represented by Luyanda Lawu, the mayoral committee member for safety and security, is set to receive about R48-million in the upcoming budget and R42-million and R37-million, respectively, for the next two financial years. The ward has several informal settlements that need major infrastructure projects. Last week, the budget was once again 'noted' in the council as Nelson Mandela Bay Executive Mayor Babalwa Lobishe said negotiations around ward allocations were ongoing. According to the budget document, the metro faces 'significant challenges' with the new budget, including: A declining collection rate; The poor financial performance of the electricity service, which now operates at a huge deficit; Escalating electricity and water losses that are at unacceptably high levels; Allocation of the required operating budget provision for newly created infrastructure and facilities, with a consequential impact on the level of property rates and tariff increases; Allocation of the required budget provision for the rehabilitation and maintenance of infrastructure; Underfunded mandates, such as the Library Services, negatively affect the municipality's budget; and Financial commitments emanating from previous council decisions, such as the insourcing of security guards, which become an ongoing cost on the municipality's payroll. DM


Daily Maverick
4 hours ago
- Daily Maverick
R257bn for Eskom to meet minimum requirements, aims for 40% emissions reduction by 2030
The power utility said it planned to achieve a 40% reduction in emissions by 2030 at the fleet level. Its preferred approach would cost R77bn in capital expenditure and R2.1bn in annual operational expenditure. Eskom CEO Dan Marokane says it will cost the South African taxpayer up to R257-billion for the utility to do the necessary upgrades for it to meet government-mandated minimum emission standards. Compliance, in this way, could translate into the equivalent of up to a 10% tariff increase. He and members of Eskom's executive were briefing Parliament's Select Committee on Agriculture, Land Reform and Mineral Resources on Tuesday, 10 June, in Cape Town. The briefing outlined the financial costs, the direct threat to the nation's power supply and the significant potential disruption to electricity supply that would come as a consequence of the legally mandated environmental regulations. Eskom's team put a figure of about R257-billion in capital expenditure (Capex) on what it would take to achieve full compliance with minimum emission standards across six of its major power stations, namely Medupi, Majuba, Matimba, Kendal, Lethabo and Tutuka. This would also incur R6.3-billion in annual operating costs (Opex). To date, Eskom has spent more than R3-billion on emission abatement projects, with an additional R15.6-billion allocated over the next five years. In March, Daily Maverick reported that Minister of Forestry, Fisheries and the Environment Dion George granted Eskom limited exemptions from minimum emission standards for eight of Eskom's coal-fired power stations. Two power stations, Duvha and Matla, were granted nine-year minimum emission standards exemptions until their planned decommissioning dates in 2034. Six other power stations were granted five-year minimum emission standards exemptions until 1 April 2030. These are Kendal, Lethabo, Majuba, Matimba, Medupi and Tutuka. Marokane said the implications of compliance with the emissions standards extended beyond the financial. Up to 22 gigawatts (GW) of the coal fleet's generating capacity is 'at risk' of being shut down if it cannot comply with the stringent post-2030 standards for sulphur dioxide (SO2) emissions, which, while beneficial from an environmental perspective, could imperil the progress Eskom has made in taming load shedding should that capacity not be replaced accordingly. This risk materialises after that 1 April 2030 deadline, when the exemptions granted for several stations expire. Given that retrofitting the necessary Flue Gas Desulphurisation technology takes 7-10 years, decisions are needed now to avert this cliff-edge scenario. Eskom, Marokane told members of the committee, was of the view that its preferred approach was not full compliance but instead, it would focus on SO2 reduction at its newest plants, Kusile and Medupi, and complete particulate matter and nitrogen oxide upgrades at six stations. This path would cost R77-billion in Capex and R2.1-billion in annual Opex. However, as was noted by members of the committee, even this 'cheaper' option was severely underfunded, as mentioned above, with R15.6-billion allocated over the next five years. Moreover, Marokane explained, Eskom intends to expand its 'clean energy capacity' and 'optimise the existing coal fleet' to meet a 40% reduction in emissions by 2030 at the 'fleet level'. This means that the coal station fleet in aggregate would see a 40% reduction in emissions, but this would be unevenly distributed from station to station because some of the newer stations may see their production ramp up to compensate for the shutdown of older stations. Health costs While Eskom's briefing touched on the socioeconomic consequences of plant shutdowns, such as the impact on 14,000 direct jobs, it did not provide an assessment of the direct health costs and mortality associated with its emissions. This gap was highlighted by a recent report titled Unmasking the Toll of Fine Particle Pollution in South Africa. That report by Greenpeace Africa and the Centre for Research on Energy and Clean Air (CREA) found that in 2023 alone, 42,000 South Africans died from exposure to fine particle pollution (PM2.5), including more than 1,300 children under five. It combined PM2.5 concentrations (sourced from satellite data, ground monitoring and atmospheric models) with population and health data from the Global Burden of Disease database to calculate health impacts. PM2.5 refers to airborne particles smaller than 2.5 micrometres, mainly formed by burning coal and fuel. Daily Maverick wrote that the report estimates that PM2.5 pollution cost the country more than R960-billion in 2023 – equivalent to 14% of GDP – through premature deaths, illness, lost productivity and overburdened health systems. These particles, as CREA analyst Lauri Myllyvirta previously explained to Daily Maverick, are 'small enough to pass from lungs to the bloodstream and wreak havoc on all our internal organs'. Communities in the Highveld region and Gauteng and Mpumalanga, which are home to the country's largest coal-fired power plants and industrial zones, are hardest hit. Briefing the committee on Tuesday, Deidre Herbst, senior manager for environmental management in Eskom's Generation Division, confirmed particulate matter's deleterious impact. While sulphur dioxide was the 'biggest challenge', particulate matter caused the most harmful health impacts, she explained. DM DM


Daily Maverick
7 hours ago
- Daily Maverick
How Sarb and SA's banks are wiring the country's green finance grid
How do you price the risk of a dying planet? The South African Reserve Bank and the country's financial institutions are mapping out a new financial grid for an economy hit by climate extremes. At what point does climate risk become financial risk? And how does a central bank protect the economy when the shocks are fiscal as well as physical? During a recent talk at Stellenbosch University, South African Reserve Bank (Sarb) deputy governor Fundi Tshazibana clarified the central bank's role. 'We are not the drivers of climate policy in the country, we are not the drivers of environmental policy in the country,' she said. 'Where we are focused as central banks is to say there are risks that are associated with climate change, there are risks that are related to extreme weather events, there are risks related to deterioration in nature.' Sarb doesn't set carbon targets, but it does police the intersections between financial stability and ecological collapse. The mercury is rising. South Africa's inflation could spike by 15 percentage points if climate shocks continue, said Tshazibana. Droughts are intensifying and floods are more frequent. In 2022, Sanlam estimated its risk exposure to the floods in KwaZulu-Natal at around R4-billion. And that was just one insurer. The KZN government estimated economic losses in the province amounting, overall, to about R17-billion. Tshazibana noted that when the Sarb asked banks how much of their credit risk exposure lay with companies vulnerable to climate-related events, the answers ranged from 30% to 60%. Inside Sarb's climate risk arsenal In response to the financial risks climate change poses, Sarb has beefed up its toolkit: Bi-monthly inflation reviews now take climate shocks, such as food price spikes due to droughts, into account. Advanced modelling using dynamic and general equilibrium frameworks with granular data, aims to capture the multidimensional impact of climate change. Climate stress-testing: Banks completed Sarb's first round of scenario tests in 2024, and insurers are next. Guidance to financial institutions: Tshazibana urged financial institutions to 'go talk to your clients and start collecting that information so that you yourself can understand the risk exposure'. Greening Sarb's operations: Sarb has developed a strategy to reduce its carbon footprint by 30% by 2026 and reach net zero by 2035. Treasury's call to mobilise sustainable capital Deputy Minister of Finance, David Masondo, told the SA Financial Competitiveness Lekgotla that economic growth stagnated at around 0.6% in 2024, with infrastructure limiting transformation. Masondo affirmed the department's commitment to 'mobilise capital for investment and enhance the competitiveness of South Africa's financial markets'. The Treasury is working with global financial networks and development institutions to mobilise blended finance for adaptation, ensuring capital flows into climate-resilient infrastructure, Masondo said. How does this affect you? Food prices could increase. Climate shocks like floods and droughts disrupt farming, which means your grocery bill could spike. Jobs are on the line. As banks adjust their lending strategies to favour low-carbon sectors, carbon-heavy industries may miss out on financing. Your bank is watching your carbon footprint. Financial institutions are beginning to factor climate risk into loan and credit decisions. Pensions and savings are exposed. If insurers buckle or banks miscalculate the risks of the effects of climate change, your savings could be expected to carry the cost. Banks get down to green business Banks such as Standard Bank are on the frontlines of implementing green financing strategies – trying to turn sustainability into a return on investment. The bank recently launched a Sustainable Finance Product Framework, mapping out how green, social, and transition-labelled debt instruments will be structured and tracked. 'Green categories like climate adaptation or resilience funding or funding for nature-based projects may require greater use of innovative blended finance structures… regulatory incentives that enable green funding are required,' said Boitumelo Sethlatswe, Standard Bank's head of sustainability. Sethlatswe said that South African banks were investing in analytical tools and building internal models using client and open-source data to assess climate risks, but noted that inconsistent data and long-term modelling were a problem for Africa. The system is catching up While Sarb stress-tests the system, Absa says the entire financial sector is making strides. 'South Africa's financial institutions, including Absa, are taking significant steps to improve the way we identify, assess and manage climate-related financial risks,' a spokesperson said. Absa points to growing alignment with global frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD) and said that internal risk governance was catching up. But in a country with sky-high unemployment rates, the climate conversation should take social realities into consideration. 'The South African Reserve Bank and other monetary authorities play a critical role in facilitating a just transition,' Absa said. 'In a high-unemployment country, it is essential to strike a balance between climate goals and inclusive growth. Absa believes that regulators are increasingly asking the right questions. 'The supervisory focus on climate exposure and transition risk is helping to elevate climate risk management within financial institutions,' the bank said. Nedbank prepares for more demanding disclosures Nedbank, which published its first TCFD report in 2021, says the sector is already preparing for more stringent mandatory disclosures. 'We submitted stress tests last year to the Sarb in line with the rest of the banking sector,' said Priya Naidoo, Nedbank's executive for strategy. 'We maintain a focus on ensuring that we are ready for the enhanced disclosures.' The bank has also introduced a Climate Risk Materiality Framework, aligning its lending decisions with guidance from Sarb, the Basel Committee, and international bodies such as the Intergovernmental Panel on Climate Change and the Network for Greening the Financial System. A strong focus for Nedbank is on integrating climate risks into all major risk types, including credit, market, operational, and funding risk. 'Credit risk management is in place to incorporate and monitor progress toward the bank's strategic climate-related objectives of reducing exposure to all fossil fuels by 2045,' said Naidoo. This includes tracking exposure across sectors and implementing transition 'glidepaths' to gradually reduce carbon-intensive assets, she said. Nedbank also flags that the success of climate-aligned finance depends on cross-functional collaboration across business, finance, risk and sustainability teams. Climate resilience is now a core strategic pillar as consumer and investor expectations evolve. DM