How cadre deployment has brought Buffalo City to its knees
by The Editor
FEATURE: Did you know Buffalo City has been without a chief financial officer for more than 1 000 days or that, in the last three years, it has had four executive mayors and six municipal managers? Little wonder its financial management has collapsed over the last five years, to the point where the province has threatened to strip it of its powers. The primary reason: cadre deployment and politicisation of a municipality that, just five years ago, received a financially unqualified report from the Auditor-General.
How cadre deployment has brought Buffalo City to its knees
By: Gareth van Onselen
25 April 2012
For years the media has not properly interrogated the ANC’s policy of cadre deployment or the party’s defence of it.
According to the ANC’s own internal definition, cadre deployment is designed to bring under the ANC’s control “all the levers of power” which it lists as “the army, the police, the bureaucracy, intelligence structures, the judiciary, parastatals, and agencies such as regulatory bodies, the public broadcaster, the central bank and so on”. Put bluntly, it is designed to ensure every institution, independent from the state or not, is accountable first and foremost to the ANC.
As the consequences of the policy have become more apparent – the crippling of many public bodies and both the principles of accountability and the separation of power denuded of their worth – so the ANC has been forced to defend the idea. That defence has typically taken the following form: there is nothing wrong with deploying cadres, admittedly they have not always been the best candidates – not well qualified for the position – but the principle is sound and the ANC will continue with it.
That analysis has been largely accepted by the media: the principle is sound, only its pragmatic implementation has been flawed. In an editorial last year, for example – titled ‘We’re paying dearly for ANC’s cadre deployment policy’ – the Times would argue:
“Much of the mismanagement can be blamed on the ANC’s policy of cadre deployment, which has consistently led to dismal appointments in provincial and local government.”
Now, there is much truth to this and so one should acknowledge that criticism at least. If political allegiance trumps merit and skill, it follows that appointments will not be made on the necessary criteria, resulting in poor performance. But, crucially, the principle is also wrong. When it comes to those institutions designed to be independent of the state – the public service, the judiciary, chapter nines – appointing someone with a political agenda is anathema to their very purpose. If anything, their allegiance should be to the public’s best interest, not the ANC’s. More often that not, this point is missed.
Of course, when you have both problems combined – a cadre without the proper skill and with a political agenda – appointed to a position designed to be independent, well some kind of meltdown is almost inevitable. Throw into the mix patronage and self-enrichment, and given how factionalised the ANC is, not only is such a meltdown more likely but more likely to happen on a grander scale.
There are a myriad such examples. Today, however, I intend to highlight just one: Buffalo City in the Eastern Cape. Recently elevated to the status of metropolitan municipality (which entitles it far greater financial support), cadre deployment has brought this local government to its knees and effectively shut down service delivery, as senior positions in its civil service were systematically compromised by the appointment of political acolytes without the proper qualifications and whose sole purpose was to use the resources at their disposal to serve their own agenda, as opposed the public’s.
Dysfunction and dire delivery
It was recently reported that, some two months after the appointment had been made, the contract of Buffalo City municipal manager Andile Fani was yet to be tabled before the legislature. The appointment itself had seemingly brought to an end more than three years of indecision about the position which, along with that of chief financial officer, had remained vacant for some considerable time. Technically it still is.
In his 2009/2010 report on the municipality’s financial management (the municipality received a disclaimer of opinion that year) the Auditor-General wrote the following:
“The critical positions of municipal manager and chief financial officer remained vacant for the second consecutive financial year. Further instability resulted from the suspension of a number of directors during the year under review and only two of the director positions were filled at year end. In addition two acting municipal managers were seconded from outside the municipality during the financial year and these individuals left the entity in controversy. The unfilled and acting positions have destablised the entity at strategic and operational levels and has had an adverse impact on service delivery in general.”
In his 2010/2011 report, the latest available, (the municipality received an adverse opinion last year, the most damning finding the A-G can make) the A-G would again raise the issue:
“The permanent filling of key leadership positions remains a challenge. For the third consecutive year, the critical positions of city manager and chief financial officer remained vacant at year-end. The suspension of three directors was only lifted in June 2011 and the cases against these individuals have not yet been finalised. Key leadership vacancies have directly contributed towards the weakening of the general control environment of the municipality during the past three years.”
It is true that for much of that time there was an acting municipal manager in place (Andile Fani) but the temporary nature of any such a contract means one is not able to plan long term, nor is the particular individual able to operate in good faith – as they have the sword of Damocles hovering permanently above their head. No municipality can be expected to function properly without a municipal manager and chief financial officer in place for three months, nevermind more than 1 000 days.
The effect of this, along with other general and widespread dysfunctionality, meant Buffalo City’s financial management went into a downward spiral from which it has not yet recovered. It is a collapse best illustrated by the following table:
In 2003/2004, the municipality managed to achieve a financially unqualified report, with just two points raised by the A-G under emphasis of matter (non-material concerns). From that point on, there has been a systematic decline. It is true that, in 2006/2007, the deterioration was arrested somewhat (although only so far as to receive a qualification from the A-G, albeit a minor one – three points of qualification and one point under emphasis of matter for a total of four) but from that moment on, its financial management has systematically imploded:
Three points of qualification in 2006/2007, four in 2007/2008, six in 2008/2009, eight points on which the A-G’s opinion was disclaimed in 2009/2010 and, last year, nine points so severe the A-G was forced to issue an adverse finding. Over those five years, its total points have gone from four to 12 and, in each case, each point become so critical the A-G’s 2010/2011 report included some 80 paragraphs (each paragraph being a sub-point) and ran to 14 pages.
In 2007 Buffalo City was awarded a national VUNA service delivery award for excellence. In 2011, the provincial government threatened to strip the city of its powers as it stood on the brink of administrative and financial collapse. How quickly things fell apart. The A-G’s reports on Buffalo City, for the last five years in particular and the last nine in general, represent the quintessential example of an ANC administration in meltdown.
I have included in the table above the municipality’s credit rating, where they were available in its annual reports. Every municipality outsources to an independent agency an assessment of their long and short term financial viability, based on a range of fundamental criteria. In short, the better the rating, the more likely the municipality will be able to repay a loan as promised, on time and in full; the worse the rating, the less the chances and the more the indictment of that institution. The ratings are then applied to the municipality’s long and short term prospects.
In the case of Buffalo City, it used the agency CA-Ratings. Each ratings agency uses its own set of categories to issue a rating, specific to the country being evaluated. In the case of CA-Ratings, their system is as follows:
• zaAAA: Extremely Strong
• zaAA: Very Strong
• zaA: Strong
• zaBBB: Adequate
• zaBB: Very Low Degree of Speculation
• zaB: Low Degree of Speculation
• zaCCC: Moderate Degree of Speculation
• zaC: Capital Payment is Impaired
• zaD: Default
• Strong: zaA1+
• Adequate: ZaA1
• Weak: zaA2
Within each long term category, the agency can qualify a rating. So you could have, for example, zaAAA- or zaAAA+, to illustrate where a municipality sits within that band. Although the best short term rating (zaA1+) has a permanent + attached to it, the other categories can be distinguished in the same way.
One needs to understand too, these ratings are relative. It is next to impossible for a municipality in South Africa to default completely, because there is always the prospect it would be bailed out by the national government and because it receives every year from the national and provincial government its portion of the equitable share.
That said, Buffalo City fairs very badly.
With regards to its Long Term Credit Rating (its ability to repay long term loans), it has stabilised at ‘Strong’, but never managed to breach the ‘Very’ or ‘Extremely’ strong categories, as most other metros have. Given its sustained dire performance over the past five years, there is every reason to believe its Long Term Rating might be affected negatively in the next round of assessments. As for its short term rating, that is far worse. It did by 2008 improve from the ‘Weak’ band (zaA2) to the ‘Adequate’ band (zaA1) but over the last four years has declined from zaA1 to zaA1- and is now in serious danger of lapsing back into the ‘Weak’ zaA2 band again.
Credit Ratings are like the bank’s assessment of you when you apply for a home loan. If you have a history of bad debt, poor financial management, dubious policy and practice and the misuse of credit given to you in the past, you won’t qualify for a loan. With regards to municipalities, a bad rating is a clear signal to investors to stay well away. And when that happens, the economy shrinks, employment drops and it becomes harder and harder to create new jobs. And that is to say nothing of the service delivery shortcomings on which the A-Gs reports are based.
This, then, is the reality Buffalo City finds itself in, some 18 years after democracy. How did it happen? To answer that one needs to turn to the policy of cadre deployment, a monster of the ANC’s creation, now running wild in Buffalo City.
The meltdown: division and discord
First, something about the broader political context. The Eastern Cape is the ANC’s political heartland. And, as is now well known, thus one of the provinces fundamentally divided by the ANC’s Mbeki-Zuma Polokwane conference and its subsequent outcome. Almost every battle in the province, at every level, is now contested between representatives of different factions. In turn, almost every public institution in the province is likewise divided and every appointment a chance to place the “right” cadre into a position of influence. Not just to secure further patronage but to implement properly the designs of the relevant faction.
Because there is no culture of merit-based appointments in the ANC, this kind of environment reinforces factionalism, every decision becoming a potential fault line.
Back to Buffalo City.
At the conclusion of the 2011 local government elections, Buffalo City appointed Zukiswa Ncitha as its executive mayor. This would bring the total number of mayors in charge of the city in the last three years to four – Zintle Peter, Sakhumzi Caga and Zukisa Faku being the others. Over the last five years the municipality has had six municipal managers, five of them in an acting position. The chief financial officer position has now been unoccupied for over three years, again, with numerous acting officials rotating through it.
These facts alone are essentially enough for an explanation as to Buffalo City’s maladministration. Every successive appointment was contested – ground zero for a war of attrition still playing itself out. Proper management of a city which, if anything, requires long term planning, is nigh on impossible with this kind of turnover. Political positions such as the mayor are one thing, but they have a direct impact on appointments such as the MM and CFO, and so those too are compromised.
But it is about far more than loyalty, positions such as these come with the possibility of great patronage – the perfect way not just to shore up support but an opportunity to self enrich. Both dynamics were at play in Buffalo City.
Also included in the A-G’s 2009/2010 report was the following paragraph:
“In addition, council’s effectiveness has been compromised by political infighting within the ruling alliance. This contributed towards an unstable and unhealthy general control environment and was a prime driver behind some of the reportable matters. Leadership at all levels did not sufficiently promote public accountability, confidence and sound governance.”
The South Africa Local Government Association commissioned at one stage the Human Sciences Research Council to conduct a 2010 mid-term review of the municipality in a desperate attempt to help initiate some sort of turnaround. Two paragraphs from that report are also worth quoting here:
“The turnaround of Buffalo City has had to confront the worst aspects of cadre deployment. The ANC branches were ordering the deployed cadres who were staff members of the municipality to make the municipality ungovernable. The cadres complied aggravating and further compromising the quality of municipality governance and delivery. This type of corruption cascades down from the top positions in the municipality into every facet of the administration.”
“The political reality in this municipality is that the “ANC camp is breaking up” and this political jockeying for power has engulfed and enflamed the municipality.”
Following a history of poor financial management, in particular a failure properly to spend the budget ahead of the 2010 Word Cup and huge tender irregularities, the municipality hired first Price Waterhouse Cooper, and later Ernst and Young to conduct of its administration a forensic audit. That audit made a range of findings against key members of the Buffalo City executive, including the then-mayor Zukisa Faku. It found that, among other things, she had interfered in the appointment of contractors and bypassed supply chain management protocols. This, however, was just with regard to the mayor. Outside of her, it set out in gory detail the massive material mismanagement of Buffalo City administration.
To date the municipality has failed to properly implement the recommendations contained within the report.
It was, however, enough for Jacob Zuma to discard Faku as mayor candidate for the 2011 local government elections and with a new mayor, to confirm Andile Fani as municipal manager. Prior to the election, Faku had faced a total of 12 charges from the party, which, according to the Times, included undermining the ANC by appointing a new municipal manager “outside the ruling party’s deployment procedures”. The party’s disciplinary committee expelled not just her but 22 Buffalo City councillors whom, it said, had brought the party into disrepute by supporting the appointment of the new municipal manager.
More recently, the Daily Dispatch reported that Faku had made a “dramatic comeback”. Leading a group “hostile to President Jacob Zuma’s bid for a second term as ANC president” she was elected head of the ANC’s new Buffalo City region. The paper reported that this would no doubt “reopen debate about the controversial appointment of Andile Fani as municipal manager”. Faku, elected as a councillor in 2011 and who serves on the executive, will now no doubt be able to mobile from inside the government too. And so the vicious circle remains unbroken and it makes sense, as set out earlier, that Fani’s appointment has still not been ratified by the council.
That Fani’s appointment too was political is evidenced by his selection. More than 30 other candidates were overlooked, most instantly dismissed for not having the necessary qualification – a certificate in municipal finance management – but not so Fani, who is strongly supported by the Zuma faction and the SACP in particular. When he told the committee he had taken the requisite course but not yet received his results, they did not disqualify him as they had done other candidates, instead twice delaying the interviews so that he might obtain his results. Later the Local Government Seta and the South Africa Qualifications Authority would not endorse his certificate, effectively nullifying it. He was appointed regardless.
Following the Ernest and Young report, mayor Faku dismissed her entire Mayoral Committee and six Senior Managers – the politicians reportedly because they were mobilising against her. But the extent to which these sort of political and public positions (the MM for example) were in the past misused by cadres with a political agenda is well documented by the A-G.
I shant set those out in detail here, suffice to say in both his 2009/2010 and 2010/2011 reports the A-G makes repeated reference to how the supply chain management process and the awarding of tenders was repeatedly abused by the previous municipal manager and other elements of the administration.
The effect on service delivery
As a result of these problems and many others for the 2008/2009 financial year Buffalo City under spent its capital budget by R318 million or 46%. By the time an acting municipal manager took over in 2010, it was spending just 18% – the budget simply being rolled over year-after-year. In his adverse opinion for 2010/2011, the A-G found that the municipality could not properly account for some R2 billion. The inability properly to invest infrastructure had led to a backlog so acute than in 2009 the municipality lost 53% of all water distributed and suffered electricity losses of R104 million (13% of the total). The A-G politely described the losses as “excessive in comparison with other high capacity municipalities”.
These were service delivery problems on the grandest scale.
The HSRC report puts it like this:
“The City has been brought to its knees by intrigue between the politicians and senior managers. Every area of service delivery was failing and falling behind whether in housing, roads, water and sanitation or electricity.”
Intertestingly, though, the municipality did manage to spend R1.83 million and R1.89 million on ‘entertainment‘ for the 2011 and 2010 financial years respectively.
One can only imagine how these sorts of problems manifest in the day-to-day lives of the citizens of Buffalo City, particularly the poor who are the first to bear the brunt of this kind of self serving abuse of good faith.
All political parties experience some kind of factionalism, although rarely as acute as the ANC is experiencing now, and certainly all political positions are hard fought behind the scenes. No one can begrudge the ANC that, at least not so far as it is reasonable and does not compromise the organisation itself.
But the minute you elevate political loyalty to a formal policy, as cadre deployment does, and seek then to extend it not just to political appointments but the public service too, you have not only violated the principles that define best democratic practice, but created the potential for the perfect political storm. And Polokwane formed those condensed storm clouds into a raging tornado. It now rips through the country, from Limpopo to the Eastern Cape, and the damage it causes is most evident in those places, like Buffalo City, were an entire public administration has been turned into a focal point for the ANC’s political feuding.
The great benefit of legislating for merit and excellence is that it is a standard to which everyone can aspire, regardless of their political affiliation. It is for this reason the public service is designed to be politically neutral – because it’s very purpose is to put the best interests of the public first.
The ANC in Buffalo City has fundamentally failed that test. And the people of Buffalo City are the poorer for it. If ever there was a hard case against cadre deployment it is this municipality. It should be put to the ANC and, instead of a vague, generic defence, it should provide a proper explanation. It owes Buffalo City that much at least.
The Daily Dispatch ran an edited version of this blog as an oped. See here to read it.
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Now here is the joke of the century. 22nd March 2011, BCM was elected the second best municipality in SA!!! The received the so called VUNA Award. LMAO