Election puts R130bn of metro budgets in play

Johannesburg - The African National Congress (ANC) could lose control of more than R130bn in city budgets as political parties negotiate coalitions to govern four of the country’s biggest municipalities, including the capital, Pretoria, and the economic hub, Johannesburg.

The ANC’s support dropped to 54.5% in the August 3 local government elections from 62.2% in a national vote two years ago, its worst performance yet.

It was relegated to the second-biggest party in the capital, Pretoria, where the Tshwane municipality oversees about R30bn of spending, and Nelson Mandela Bay, which includes the city of Port Elizabeth and manages about R11bn, according to the cities’ budget documents.

The party lost outright majorities in Johannesburg, which has estimated expenditure of more than R50bn, and its industrial hub neighbour, Ekurhuleni, with a budget of about R40bn.

"It’s a massive amount of money and it has ramifications in a whole range of areas," Ivor Sarakinsky, a senior lecturer at the University of the Witwatersrand’s School of Governance, said by phone on Wednesday.

"All of these metros procure significant goods and services from private-sector companies and the supply-chain management systems that manage that procurement are going to be shaken up dramatically."

Companies which previously won certain contracts might no longer have access to those public tenders, he said.

The ANC’s support fell in major cities as disenchanted voters fled to opposition parties amid increasing protests over a lack of services such as housing, water and sanitation, an unemployment rate of 27% and zero growth forecast by the Reserve Bank.

This has opened the door for the Democratic Alliance (DA) to try form coalition governments in municipalities with smaller opposition parties, including the Economic Freedom Fighters (EFF).

The ANC won outright control in only three of the nation’s eight metropolitan municipalities, down from seven in 2011, while the DA increased its majority in Cape Town.

While the DA and EFF have said they will work with other opposition parties to form coalition governments, both have said they won’t work with the ANC.

"The money and the potential influence that goes with it is going to be a very important factor in the coalition talks," Gary van Staden, an analyst at NKC African Economics in Paarl, outside Cape Town, said by phone on Wednesday.

"It’s big money. To get your finger into that pie is certainly going to play a role."