The cost of losing Graham’s name

Fri, 25 Jan, 2013

Reg Rumney
The Grahamstown name-change saga prompts me to consider the political and economic cost of such a move.

Economists are wont to separate economic and political considerations. In practice, it is difficult to do so.

So an argument could be made that changing Grahamstown’s name has no tangible economic benefit and that even if the cost is low the money could be better spent elsewhere.

The argument would be that the symbolic value of ditching “Grahamstown” is outweighed by economic considerations, such as changing marketing materials, signage, the loss of a well-known tourist brand – and more importantly the cost of changing legal documentation.

At the outset let’s realise that any cost argument may not convince the proponents of a name change to stop calling for one.

Though there has been stiff opposition from Afrikaner groups to the proposed change of name from Pretoria to Tshwane, mayor Kgosientso Ramokgopa in November last year vowed to change the name whatever the cost or opposition.

Costs can be disputed, and a retreat from a position is defeat.

My first guess was that the direct cost of changing Grahamstown’s name would not be great, involving a few name boards and some stationery and marketing material.

Yet if the Lowveld Chamber of Business and Tourism’s concerns about the name change of Nelspruit, the capital city of Mpumalanga, are correct the cost of a name change is much higher.

According to a City Press report last year the chamber estimated the cost of changing the name of Nelspruit to Mbombela to be around R350 million.

A chamber spokesperson Linda Grimbeek pointed out that not only name boards will have to change, but also items like stationery for local businesses.

The biggest cost to be borne by the municipality however, would be changing “general plans, title deeds and registered bonds on the deeds”.

This would make up most of the R350m cost.

If a name change is going to cost Nelspruit this much, how much will it cost Makana to change Grahamstown’s name?

And has a proper cost-benefit analysis been done?

I find it hard to ascertain the value of the Grahamstown brand. I reckon that the Garden Route, the surrounding game farms, the National Arts Festival and university affect tourist receipts, specifically B&B and other accommodation income, more than any historical meaning of Grahamstown.

Aside from hard figures, there is always the emotional price attached to any major change in the environment in which people live as opposed to the possible benefit.

Many Grahamstown residents will find a change an emotional cost, hard to quantify but nonetheless real. Names evoke nostalgia as well as resentment, and not everybody knows the history of Colonel Graham well enough, or cares enough to want to see part of their personal history vanish.

I suppose that since the people who oppose a name change are considered to be largely white and opponents of the ANC, any resentment at the process is a plus because a name change is then a political victory.

In politics, it has been noted, it is not enough for you to succeed: your opponents must fail.

The political cost for the majority party in the council then is minimal: upsetting people who will not necessarily vote for you. The political benefit is positive, pleasing the members of the party at local and national levels.

Moreover, it’s an easy win.

A name can be changed with much less effort than distributing resources, or erasing other legacies of apartheid and colonialism.

This should be another lesson we draw from the debate.

When the name is changed, the residents of this city can get on with the urgent task of improving the reality that the city name represents.

If this does not happen, the name change will be a bitter reminder of unfulfilled promises of a better life for all.

Moreover, marketing a city as a tourist destination is more useful if the quality of the experience enhances the chance of a repeat visit.

A name change might not even be up for discussion if national politics didn’t dominate local politics.

Local politics might dictate that much more urgent, non-symbolic problems be fixed first, such as the lack of a regular supply of good quality water, and the inefficient collection of rates and taxes.

Finally, there is a cost that isn’t considered, and that is losing the spark for historical memory.

I fear that the very enormity of the colonial conquest of the Eastern Cape that Colonel Graham represented will be forgotten once Grahamstown’s name changes.

I don’t think we should forget or gloss over the brutal reality of colonialism he represents, and his specific crimes against the Xhosa people.

Grahamstown’s genteel poverty is legendary.

Sunday, 16 Sep, 2012

Reg Rumney

In Johannesburg, if someone is said to have money, people ask, “How much?” In Cape Town, they ask, “Ah, but is it new money or old money?” In Durban, they ask, “How much of it is offshore?”

In Grahamstown, they ask, “What’s money?”

Yet I am surprised when looking around Grahamstown at what seems to be reasonably high levels of conspicuous consumption. Granted, the number of SUVs and Mercs is outstripped by the number of daddy-bought entry-level cars and lecturer-owned skedonks. The SUVs and Mercs, and the fashionably fitted households do exist, however, and the people who inhabit them do not skimp on material goods.

The difference between those who appear to have money and those who don’t is, I am reliably informed by someone involved in finance in Grahamstown, often debt.

To be sure there are some debt-free people here who are wealthy by Grahamstown standards. But many of the luxury vehicle drivers who eat out all the time and wear expensive clothes simply have access to more credit than the rest of us. They are floating on a sea of debt.

Now at this stage you might expect some kind of jeremiad against the evils of debt, recalling the words of Polonius in Hamlet: “Neither a borrower nor a lender be.”

To be sure, the terrible events at Marikana have, among other things, raised the issue of the levels of debt in our society. It transpires that the earnings of some of the miners, low as they are, were further depleted by garnishee orders as a result of unpaid debt.

Some of my fellow journalists earnestly warn people against borrowing, or raise the spectre of the consequences for South Africa of high levels of household debt, or the perils to the economy of “unsecured lending”. The technical term for this is moral panic.

Debt is, indeed, a double-edged sword. Without it, however, societies find it hard to function. The role of banks is not, as some suppose, to keep our deposits safe but to lend the money out many times over to businesses and individuals so that they can function in this capitalist economy.

Individuals do not need as much debt as firms, but they also find it hard to build capital without it, in the simple area of residential property. When banks stop lending, property markets tend to collapse. A slump in residential property markets soon feeds into the broader economy through the “wealth effect”.

What this means is that homeowners who thought they possessed a goldmine find instead they have a house with all the costs that entails. This is especially so when houses have “negative equity”, which means that the house can be sold for less than the bond taken out to buy it.

Individuals also often need debt to buy the means of transport to and from work.

I have known a few people who have lived without any debt at all. Inherited wealth or some kind of windfall sometimes plays a role, enabling the purchase of a car or a house or both. Some, among the middle class and the poor, have incredible self-discipline.

Moreover, there is a good psychological reason to avoid debt. While some people happily ignore the credit fuelling their lifestyles, sometimes until it is too late, for many it is a constant mental weight.

Conversely, I seem to remember that having cash in the bank can be enormously mood-lightening.

We need to differentiate between careless or uninformed spending based on debt and the distress debt that also characterises our society.

Distress debt is that debt caused by, for example, the cost of a funeral, paying for hospital or other medical emergencies, and a host of other ills that befall ordinary people unexpectedly and for which money has to be urgently sought. For some middle-class families, the cost of rehab falls into this category, since medical aid schemes rarely pay this cost in full.

Many of the truly poor in South Africa, to summarise academic research, are not poor because they are in debt: they are in debt because they are poor.

In any case, if you have to use debt, here are few tips.

First, mortgage debt is the cheapest debt around. Using your mortgage to buy a car is the cheapest way of raising finance, though it delays that wonderful moment when your house is paid off.

Having a paid-off house and a debt-free car is financial freedom. While mortgage debt is relatively low-cost, paying off mortgage debt is the best way of saving, because it is tax-free.

There is a lot more to using credit wisely, and Grocott’s reporters may well have more tips on this and other personal finance matters in future.

Audit report is a symptom

(Column originally published in Grocott’s Mail August 7 2012)

In reporting on municipal finances I wonder sometimes if we focus too much on the negative. Take the auditor general’s recent report to Parliament on municipal audits, which is a model of transparency.

News items on the auditor general’s 2010-11 general report on local government audit outcomes painted a picture of widespread failure, highlighting the fact that only 5% of municipalities were found to have “clean audits” i.e. they were accepted with the auditor general expressing absolutely no “qualifying” reservations or “findings” about them.

Reacting to the spate of alarming reports, Xolile George of the SA Local Government Association wrote in City Press to defend municipalities from what he saw as exaggerated picture of “virtual collapse of financial management in many local governments, including the major cities”.

George pointed out that there is not much difference between “clean” and “unqualified” audits: clean audits sail through the audit process. They have no “findings,” and are the ideal. But unqualified audits “with findings” still make the cut.

The problem is with audits that are “qualified”; those that attract “disclaimers” or “adverse opinion”; or those not submitted on time.

Around half of the audit reports are unqualified, with or without findings (45%). Around half don’t make the grade for the reasons listed (55%).

George is right, however, to point out that at almost half of the municipalities the “financial statements contain no material misstatements and there was full compliance with the law”. For that is what an unqualified audit means.

“Qualified” does not necessarily mean that all the municipalities with this audit status are corrupt and full of theft and fraud. It only means that some municipalities failed to do their books properly, some failed so dismally that the auditor cannot express an opinion, and some completely failed to make the deadline for reporting.

True, all this is serious. Not having proper financial records does open the door to corruption and misspending. That’s why there is an Auditor General and a system of auditing. And skills, leadership and accountability are needed to ensure the system works.

The AG found that key officials at more than 70% of those audited did not have “minimum competencies and skills required to perform their jobs”. And he wrote that at three quarters of the municipalities there seemed to be no accountability for non-performance. Moreover, went on to point the finger at mayors and councillors who are “not responsive” to issues identified by the audits and who brush off the AG’s recommendations.

Having a number of examples of proper auditing, however, where the AG does not have to intervene at all shows that it is not impossible to do the job. We need to find out why that is not the state of affairs at the remaining 55% of municipalities. For in all the reporting I did not see a single municipal voice. Is there something we are all missing? Could the reporting systems be simplified? Are the municipalities really getting enough help from provincial and central government?

Municipalities lean heavily on consultants to make sense of the accounting. On average, the 343 municipalities and municipal entities spent more than R1.2-million each on consultants, excluding consultants from government, And this was because of a lack of technical skills rather than vacant posts. It appears municipal employees are not learning much from the consultants, because the AG cannot forecast whether municipalities will rely consultants less in future.

From my point of view and probably for at least some people in municipalities, accounting is less important than managing, and I am not concerned if they seek outside help. I would not be as worried about audits at Makana municipality if I was confident that the city was being managed properly.

If all the roads were paved properly; the water quality good and the supply consistent for all residents; the sewage adequate for all residents; and complaints and problems promptly fixed, again for all residents, I guess audits would be less of a concern for us. But then if the municipality could do these things it could probably get its act together to submit proper accounts.

For any of this to happen, citizens must use their voting power to hold their elected politicians to their promises. As long as we are passive, there is no accountability. We can’t rely on the Auditor General to do the work of local democracy.

Lastly, the figure that should have featured more prominently in all municipal audits is capital underspending. If we are ever to begin to get rid of apartheid backlogs in services, the money supposed to be spent on doing that cannot be allowed to lie idle. In our particular audit report, as I have pointed out before, R27m or 28% of the capital budget was not spent. That for me is the true shame of Makana.

Say goodbye to surging house prices

(Originally published in Grocott’s Mail, July 24 2012)

For a while, Grahamstown seemed exempt, but I see that estate agents now describe the local housing scene, in the pages of Grocott’s, as ‘a buyer’s market’. The South African housing boom is over. And that’s good news for people who haven’t yet bought homes but who want to do so.

Around the world, the fall in house prices has been astounding. People used to chat around the braai about how you had to buy the most house you could afford, because it was the best investment around. The strong feeling was that housing prices could and would rise even further. After all, look at how much it cost to buy a house in Sydney, or Atlanta, let alone New York, people would say. In times of ‘irrational exuberance’ to use a phrase coined by former US Federal Reserve Bank chairman Alan Greenspan, nobody remembers that prices fall as well as rise.

Then, suddenly, house prices started to decline. In the rich North, they plummeted. In some countries, like Ireland, they face the prospect of bulldozing brand new housing estates because no one wants to move in to the more than 1,800 of such ghost estates. Prices may still be falling, and at best have levelled out a new, much-lower price range.

South African house prices had been falling before the financial crisis, the much smaller bubble here pricked by rising interest rates.

Low real i.e. adjusted-for-inflation interest rates, coupled with good economic growth, here and in the rest of the world had helped inflate the bubble. What’s interesting now is that falling interest rates have not reinflated the bubble.

The reason is people have decided to deleverage, that is get rid of debt. Household debt levels are high, the economy is uncertain, if not anaemic, and the cost of owning property has been rocketing.

For Grahamstonians who rent out property, the fall in house prices might not be too much of an immediate problem. After all, if you’re not planning to sell soon and are still relying on rent to supplement your income, the price you’ll get when you sell at some future date is almost irrelevant.

Lower interest rates mean lower mortgage repayments, and homeowners with bonds can be thankful for this. On the other hand, rates and taxes are going up. Electricity prices are not going to moderate soon, but if the tenant is paying that’s not your concern – unless he or she defaults and leaves you with a big bill.

Those Grahamstown residents who bought their homes many years ago, before house prices rose to present-day levels, should not be too concerned. They will make less money on their original investment than during the boom, but will still make a considerable profit.

For those who bought recently, however, and have been expecting to make a killing on resale, this is a tale of woe. Eminent property economist Erwin Rode at the beginning of this year provoked the wrath and anguish of estate agents and homeowners by suggesting that South African house prices were ‘fundamentally’ overvalued by 25% and that South Africa faced house price deflation for ‘many years’.

Note that Rode was not saying that house prices were set to plunge, just that they would slowly decline for a long while, after adjusting for inflation. House prices may seem to rise, in other words, but after subtracting inflation will have actually fallen in value.

I can’t see Grahamstown escape the trend, though prices may be propped up to some extent by the purchase of houses for rent.

Remember, however, that rentals rarely cover the real cost of buying a property, unless you got it for a song during a period of steep price falls, such as after the Rubicon speech, when many whites emigrated to escape the coming revolution.

If you are looking to invest in rental property, the eventual sale price of the rental property must be high enough to compensate for maintenance costs, transfer duties, estate agency commission, capital gains tax if it applies, as well as the cost of buying the property in the first place. If you’ve raised a bond, mortgage bond payments in the first few years pay off only the interest on the loan, not the capital, so it only makes sense to invest for the long term.

And you can’t bank any more on that sale price even being higher than inflation in a few years time, or even 10 years’ time. This applies as much to your own home as to any second property you buy.

Most of us should not see our homes as an investment, so much as a place of comfort and refuge with a built-in, forced saving element.

The exception is when a country’s central bank loses control of inflation, such as in Zimbabwe. Then property is the only investment worth having – as long as it’s not expropriated, of course.

How a real market works

(Column in Grocott’s Mail July 2 2012)

There are certain goods you expect at a craft market, somehow. The stall, selling lighters, glass tubes embellished with dagga-leaf logos, Rizla-type papers, and all the paraphernalia you need to indulge in an illegal activity, was quite busy when I visited the Village Green last week during festival.

It is one of the examples I came across on how to succeed in a real market, as opposed to the somewhat abstract markets that economists think and write about. The craft market differs, however, even from the actual markets that inspired Adam Smith and others to think about how competition works.

A typical market, such as the fresh vegetable market in a city, has a number of stalls selling the same product, such as lettuce or tomatoes. The buyer can compare prices of the same product and buy from the cheapest supplier. Generally a market to which anyone can come and sell products freely will mean that competition will drive prices down to the lowest level possible.

How different is the Village Green craft market? There are barriers to entry, though they are low. The visually colourful market is designed to offer food and other products that differ from each other and from what’s in the supermarkets. Competition for the buyer’s rand is not based on price. Partly, buyers are engaging in festive, recreational shopping and can be expected to make impulse buys. I, for one, am now the owner of several things I didn’t know I needed.

It occurs to me that the key difference is that buyers at craft markets – or farmers’ markets – are usually not buying individual, recognised brands. Even if the goods are sold commercially, they are generally not supported by advertising or marketing campaigns, because the businesses are too local, alternative, or small. Elsewhere, often an essential part of what we buy is the intangible element of a brand. This is both an assurance of quality in the sense of consistency, but also quality in the sense of something else that is difficult to define. Writer Robert Pirsig believed the emphasis on market-determined quality rather than quantity was an essential differentiator between capitalism and communism.

The promise in a craft market is that what you are buying is rare in some way, or unusual, in being crafted and not mass produced; in being more “natural”. The personal touch, the opportunity to connect with the seller, seems vital.

So what lessons does the real market hold for business in a global economy where things are no longer as scarce as they once were? One is that your product (or service) must be able to command a premium by offering something unique. In a sense, being in a craft market already gives you that edge because you are selling, or should be selling, something that your prospective customers won’t get at the supermarket. In business, finding that unique niche is no mean feat.

Another is that a business should focus on what it can do best and not try to do everything. You should offer choice, but within a category of goods. The stalls that attracted me least were those which offered a bit of everything. If you are selling place mats, pottery, woven cloth, and other bits and pieces you cannot offer a wide range of pottery, for instance, in which I might find something that I want.

Be responsive to customer demand. One stall-holder I spoke to said that she comes to Grahamstown every year and had been doing so for years to sell at the market, even though she mainly sells through shops in the Western Cape. She finds it useful to get out into the real market to gauge what products people want.

One big difference between this market and others on the continent, I notice, is that bargaining is non-existent. We’re too polite. Try getting out of a market in Cairo without buying something. The vendors in African markets expect bargaining, so they start high and progressively lower the price until you are literally walking away. Our craft market sellers are missing out on a form of what’s known as “price discrimination.” Bargaining means that you can sell the same product at a range of different prices, getting more for the same thing from those with money to burn than the more careful buyer. Discounts are a version of this.

Finally, even in a market where goods are not directly comparable, price remains significant. I compared a Pakistani-made Kelim rug with an Eastern Cape mohair carpet of a similar size and the price difference of around R1 100 would have made me buy the Kelim. Also, one of the stall-holders told me that he sold below his usual prices at the festival, because customers expected it.

There are 198 stall holders this year, 20 more than last year, and this could be an indicator of an improving economy. I wonder, however, if customers are browsing less and buying more or vice versa. I know that if times were less uncertain I myself may have bought even more things I didn’t know I needed.

Municipal services – democracy in inaction

(Published in Grocott’s Mail June 26 2012)

Grahamstown is not alone in South Africa in having a big divide between rich and poor. However, unlike some other towns and cities where Apartheid managed to shove the poor into far-flung townships, poverty and inequality are a bit more obvious here. I saw an Audi TT overtake one of our donkey carts plodding alongside the N2 just outside the city a while back and the symbolism was just too palpable.

However, money not only separates us it also unites us and it does so through the Makana municipality, of which Grahamstown is the major part. Rich and poor rely on municipal services like waste collection, electricity, roads and sewage and all but the poorest pay for them, at least in part, through municipal tax.

We should all, then, be attentive to what happens to the money that flows into the municipal coffers and how it is spent. It is in all our own interest to see that the money is spent properly and collected fairly.

Weakness in municipal finances represents a serious threat to our stability in South Africa. According to the 2011 SA Reconciliation Barometer survey, South Africans have the least confidence in local government of all the three spheres of government, local, provincial and national. Not all the violent protests we’ve seen in recent years may be solely or always driven by a lack of “service delivery”, but it is commonly the flashpoint.

The Auditor General earlier this year reported that only 6% of South Africa’s 302 municipalities and municipal entities audited had received completely clean audits from his office, though a further 51% fell into the next best category of “qualified with findings”. That means that 43% were in the bad category of “qualified, adverse or disclaimed”.

The National Treasury’s 2011 Local Government Budgets and Expenditure Review explains: “Where audit outcomes are adverse, disclaimed or qualified it indicates that fundamental principles of good governance, transparency and financial management are not being adhered to.”

So what do we do? The mayor presented the municipal budget recently, and it seems a reasonable plan, but it’s on paper. Monitoring what gets spent and how depends on you, the citizens, as much as on the local Press, the National Treasury and the Auditor General.

The Treasury’s 2011 Review goes further: “The revenue-service link between municipalities and residents is key to fostering greater accountability. This suggests that requiring poor households to pay even very small amounts for services may deepen local democracy and municipal accountability.”

While we must do our part to ensure the municipality lives up to its promises, we do depend on the Auditor General to inform us about how well or badly the municipality manages our money. And the AG’s report on Makana’s finances for 2010-2011 year (and the 2009-2010 year for that matter), shows that the municipality’s control of its finances has been poor.

For both years now the municipality’s financial statements received from the Auditor General a “disclaimer of opinion”. In the 2008-09 it was an “adverse opinion”.

A disclaimer is quite a strong signal that all is not right with the accounts. It’s no solace that Makana is not alone, and was one of 58 municipalities in the 2010-11 financial year that received a disclaimer, five more than last year. So what’s the problem?

The auditor’s report as a whole is a strong reproof to the municipal management.

This is plain though its carefully worded report simply states that amounts could not be verified or in the language of accountants’ “the municipality could not provide sufficient appropriate evidence” for, by way of example, “Existence of debtors amounting to R16-million.”

The auditor identified unauthorised spending of around R48-million – which the municipality should have picked up and didn’t – and there was “irregular” spending of around R11-million and R2.4-million in “fruitless and wasteful” spending, some of which the municipality did identify.

The report is particularly critical of “supply chain management” or bids and tenders. In almost all areas it seems it is not complying with the relevant laws. In some cases allegations of criminal irregularities have been referred to the police.

“Effective leadership based on ethical business practices and good governance, protecting and enhancing the municipality was not demonstrated by top management,” is the understatement typical of such reports.

The really worrying thing, though, is that Makana underspent its capital budget by 28%, spending only R70-million of R97-million allocated for acquiring or upgrading physical assets. This meant that it did not spend R27-million that could have gone towards materially improving the lives of Makana citizens. The result we can all see in badly maintained or no roads, the persistence of the bucket system, and problems with clean water supply among other things.

In accountants’ language, the auditor notes, “The underspending had a negative impact on the municipality achieving its service delivery mandate.” In non-accountant language, why aren’t Makana residents blocking roads and burning tyres?

Dog tax? What dog tax?

Column in Grocott’s Mail June 12 2012

It’s amazing what you can learn from looking at official documents. For instance, I learned from the budget documentation released at a special council meeting the Tuesday before last (May 29) that there is a dog tax. I have never paid a dog tax in Grahamstown and I don’t know anyone else who has either. Nevertheless, it’s there in the accounts as an item.

But the document also details the cost for the next financial year, which starts on July 1, of the municipal manager and other managers.

Budgeted for this coming year is around R1.1-million for the municipal manager (before a maximum performance bonus equivalent to 14% of salary), and I hope that the municipal manager realises that this salary level qualifies him or her for private banking.

Is this a lot or little for a municipal manager? This is about a third of what the municipal manager of Johannesburg, the centre of South Africa’s economic activity, reportedly earns, and about half the reported salary of the municipal manager of the Nelson Mandela Bay municipality.

Makana is a relatively small municipality, most of whose economic activity centres on Grahamstown, with an operating budget of around R300-million and a capital budget of around R125-million.

The total spent on the mayor, municipal managers and other executives is budgeted to rise by only 6%, but at R6-million it’s almost 6% of the total budget for municipal pay. Are the other directors and the chief financial officer worth their annual salaries of around R800,000?

More important for me in judging whether the municipal manager deserves more than R1-million a year is whether he or she ensures that the public gets value for money. More than tackling the infrastructure backlogs we all know about, such as the continued obscenity that is the bucket system, what innovative or imaginative projects has the municipality come up with? I mentioned Stellenbosch’s free wi-fi initiative in a previous column as an example of what can be done if a municipality works with the private sector and a university.

As far as I can see, the only innovation in this small city is generated by the private sector in co-operation with the non-profit sector in the form of the annual festival and the various events, such as the Highway Africa conference, that come out of the university.

What the Makana document also states in passing is that the executive mayor’s official vehicle is budgeted to cost R800 000. Since many Grahamstown residents can only dream of a vehicle like that, I can understand their discomfort. It recalls the outrage that the public expressed at the slew of expensive vehicles bought for new members of Jacob Zuma’s Cabinet.

Symbolism is important, and in an era of belt-tightening, as noted in the budget documents, it would be wise for our leaders to scale down. Why not spend the money fixing the roads so the mayor doesn’t need a top-of-the-range 4X4 vehicle?

For instance, French President François Hollande has cut his and his ministers’ pay by 30%, and he aims to tackle inequality by limiting the salaries of those who head French state-owned companies to a maximum of 20 times that of lower-paid employers. Closer to home, Malawi’s new president Joyce Banda is embracing thrift by ditching the presidential jet and a fleet of 60 luxury government Mercedes cars.

Aside from symbolism, the most revealing figure in the budget is that only around R24-million of the R125-million capital spending comes from revenue generated by the municipality. Actual requests for own-revenue generated capital spending were R71-million. Capital spending makes a lasting difference to the quality of life in the city, or at least it should do. Most of the money for capital spending comes from grants from central government.

We need as citizens to start to ask hard questions. If we are not generating enough revenue to tackle the upgrading of roads, the fixing of water and electricity distribution, and providing proper waste removal and sewage, we need as a city to have a plan to get the money. Repeating that the city’s ageing infrastructure is a problem is no solution.

We know that the city only gets in 75 cents out of every rand it bills for electricity, water, rates and services. The question is why. What does the fact that the municipality cannot collect a dog tax of R60 or so from its richer residents say about the efficiency of other collection mechanisms and indeed the municipality itself?

Love can’t buy me municipal services

(Column in Grocott’s Mail, May 29 2012)

Amid the brouhaha about the defaced President Zuma painting, it occurs to me how much the focus on the president’s private affairs distracts from the other thing that counts most in our lives. I am talking about money, which as you know can’t buy me love, but unlike love pays the bills, according to the pop songs, anyway. Indeed, pop songs are often either about love or money.

In politics it’s all about the money. We want those who we elect to be moral, upstanding human beings, but mostly we want them not to rip us off or be stupid with our money.

The way to see if local politicians and public servants are spending our money properly is through the municipal budget. If democracy is actually to work, we must scrutinise how the municipality says it is spending our money. We can’t complain if we don’t look at the figures presented to us and ask hard questions about them.

What – apart from the vital details about increases in rates, and water and electricity charges – those things that affect us directly, does the draft budget for Makana municipality tell us?

It tells us that the municipality is under pressure to contain spending, including on salaries, as the mayor explains because of revenue constraints. It tells us that the municipality expects operating expenditure to drop quite substantially. Employee-related costs are budgeted to decline slightly, and vacant posts are not being filled.

It does occur to me that the budgeted 6% increase in salaries might portend rubbish being strewn around our streets again, at the very least, if the municipality sticks to its guns.
We can see that actual budget is not huge, around the R300-million level, and that if the R210-million arrears on rates and service charges were collected the municipality would have two-thirds of its yearly budget to spend on improving the ageing infrastructure of the city. And we wonder what is being done, if anything at all, about illegal connections to the water and electricity network and getting those in arrears to pay, including the government departments that the municipality says owes “a sizeable amount”.

What the Budget Report does not tell us is how credible the budget is. For instance, in this financial year, revenue amounts from property rates, water, refuse and sanitation are all budgeted to drop. So despite the 9% rise in rates, actual revenue from rates is budgeted to drop by around 11.5%.

As importantly, what was the difference between budgeted and audited figures in past years? If the municipality could accurately gauge spending and revenue then, it is likely to be able to do so now. For example, what if municipal workers get more than a 6% pay rise? Could the municipality retrench workers and pay fewer workers more, as happens in the private sector?

What I am wondering is if the municipal officials are being deliberately overcautious in the hope that more revenue will pour in. As it happens, the previous financial year saw R36-million more being spent on operations than was brought in as operating revenue. For this year, the municipality says it expects a surplus of R28-million, and similar amounts in 2013/14 and 2014/15. I’m guessing that this is a cushion against unexpected overruns.

We will see.

The Budget Report also has some interesting facets, including a table with incredible detail of “basic service delivery measurement”. This promises to match spending with piped water, sanitation, free basic services and a host of other things. Unfortunately, my copy is completely blank.

There are also tables with detailed measurable performance objectives and indicators, such as: “Promote a culture of reading and learning by 2017”, with projects such as “Access to Internet in all libraries.” This too has, for now, a lot of blank blocks.

The document has a number of tables of key performance indicators, also with information yet to be filled in. I’m guessing that this is something that comes from the National Treasury. It all seems a bit linear to me. I would hate to have to fill them in. They remind me of the “log frame” tables that non-profit organisations sometimes have to fill in to ensure continued funding. I doubt whether complicated tables replace a true spirit of wanting to serve the community, and I wonder whether the time would be better spent out of the office doing things for people. How did we manage without such oversight in the distant past?

Why not free wi-fi for Grahamstown?

By Reg Rumney

(Column in Grocott’s Mail May 15 2012)

Here’s an idea for improving Grahamstown: jack up the airport so that SA Express can fly passengers to and from PE or East London. Or, better yet, build a high-speed train to link the city to the coast.

The expense of a high-speed train, of course, can’t be justified for the kind of passenger traffic one can expect, except perhaps at the peak of the National Arts Festival season. A bigger airport is, as far as I know, not on the horizon.

There is another way that Grahamstown can be better connected with the outside world: wider and cheaper internet access. Indeed, there seems to be little reason the city cannot follow the lead of another South African university town, Stellenbosch, in providing free wireless internet access.

Rhodes University itself has a reasonably sized wireless network, with 80 access points, which it wants to beef up. The network is now accessible through the Eduroam access service for students and staff of other universities and researchers, so they can bypass the somewhat tiresome process of registering with the university before being able to use the network.

A wireless network with internet access that blankets Grahamstown would be a boon particularly for visitors to the Arts Festival, and for tourists. It could also help poorer residents become connected. Even cheap notebook computers these days have wi-fi built in, and external wireless connectors for PCs are not expensive. Smartphones are wireless enabled, and these too are spreading.

Another bonus of having a city-wide wi-fi network would be to better connect students to the university network. According to Francois Jacot-Guillarmod, director of Rhodes University’s IT Division, though the residences are all directly connected to the Rhodes wired network, around half of Rhodes students live in town, and with a few exceptions they don’t have direct access to Rhodes facilities. A city-wide wireless network could be configured (perhaps by means of an Eduroam type mechanism) to permit access for authorised staff and registered students to the Rhodes network.

Similarly, he adds that there are probably enough school teachers in town who could use such a network to link back to their school in order to make use of the school’s Internet bandwidth.

In Stellenbosch the University, the municipality and Mxit have joined forces to provide free wi-fi access. The idea is that it will be fast enough to get e-mail and for light web browsing, but downloading big files will be discouraged. I assume the same would apply in Grahamstown.

Many of us have got used to being able to stream video and download music and even films (try the Internet Archive for free classic films: archive.org). A free but restricted Grahamstown wireless Internet service would not put the ADSL and other internet service providers out of business.

So how could we do it? Jacot-Guillarmod explains that extending internet access has two parts. One is the network itself, and that costs money.

” ‘Free’ wi-fi is a nice idea, and quite do-able in Grahamstown, given some buy-in and involvement from the municipality and other benefactors. However, there’s a distorted idea of what ‘free’ means – the equipment needed to set up such a network costs money. Fixing it when it gets broken or outdated costs money. Installing, configuring and managing it costs ongoing money and skills continuity.”

He says many hundreds if not thousands of access points at R500 per access point would have to be deployed and maintained, and this cost has to be borne by the municipality.

After finding the money for the physical infrastructure, there is the question of who will provide internet bandwidth, without which the network is not much use. Despite its own bandwidth being massively boosted in coming months, Rhodes cannot do more than provide advice and access to its own websites. It is constrained by agreements that limit its bandwidth use for teaching and research. So a sponsor like Mxit would be needed.

Jacot-Guillarmod stresses that the municipality’s involvement is crucial. Aside from the money needed, municipalities have the legal status to set up this sort of infrastructure, and wireless access points require electricity and have to be mounted on poles or other high points. Perhaps the existing wireless internet service providers in the city could be involved in rolling out a network.

The project may sound daunting, and it could be objected that Makana has other more pressing needs. But this would miss an important point, and that is that the partnership between institutions that this represents could blaze a path for other projects. If the university, a charitable private sector sponsor, and the municipality could join in providing universal wireless internet access, what else might they not achieve together?

Local is more than lekker, it’s essential

Column in Grocott’s Mail April 17 2012

The closure of the local CNA, after Dunns and the Telkom retail outlet, has raised for me the spectre of economic decline in Grahamstown. What might close next?

Yet there is no need to panic. In part, the CNA’s troubles at least are national: the changing patterns of media consumption and a lack of focus make it a wonder than any CNA stores survive. As intensive media consumers like me increasingly get our news from the Internet, popping in to the CNA to buy magazines is old-fashioned. And I have for a while now wondered exactly what niche the CNA fills, since they sell everything from sweets to CDs? Telkom is under pressure to cut costs and every time I visited its very clean and friendly and now-closed outlet there were few other customers.

That the closures were all in the same part of town should be a clue that something else is happening. Jeff Peires, noted local historian, points out that the stores in the High Street are also the subject to what he calls Third World Blight and the sucking in of business by Peppergrove Mall. This is not unique to Grahamstown. Malls everywhere attract business away from main street shops.

And location is clearly important for shops. Peires has also pointed out to me that the Steers restaurant, for example, seems to have flourished simply by moving a bit further down the High Street towards the university.

The closures remain worrying evidence of Grahamstown’s general economic malaise, however. Despite being the home of one of the country’s finest universities, several pricey elite private schools, and the National Arts Festival, the city just plods along. Restaurants and pubs come and go. Just about the only new feature of the cityscape are the numerous new blocks of flats and townhouses designed to provide accommodation mainly for students.

The chimerical Woolworths food store is illustrative. Ever since I arrived in Grahamstown I have been waiting for a Woolworths food store to open. Anthea Garman, my colleague in the School of Journalism and Media Studies, tells me that she and her husband were told when they arrived at Rhodes that a Woolworths food store would be opening soon, and Anthea has been here a lot longer than I have. It looks like I may be in for a long wait.

So, like other Grahamstown residents I shop at Woolworths in PE. I miss the Woolies range of quality fresh vegetables and salad ingredients as well as other groceries. The money I spend in PE could have helped create jobs in an expanded Grahamstown Woolworths store.

For this and other reasons, I prefer to buy food locally, and would not bother to stop in PE to visit the Woolworths store there if I could avoid it. Though geographical monopolies do push up the price of some things, which I would prefer to buy in PE if I went there often enough rather than passing through on my way somewhere else, it doesn’t always, and I’ve found some Grahamstown goods and services to be markedly cheaper than in PE.

I do feel some pride in buying local where I can, as long as the price difference is not punitive. So, for example, I make a point of buying Springvale olive oil and table olives because they are produced in the Eastern Cape. The quality is equal to what is available from the Western Cape, which surpasses some European olive oils, and it strikes me as strange that Pick n Pay stocks olive oil from Spain and Greece, but not from our own region.

For the same reason, and because locally produced food tends to have a shorter supply chain and so be truly fresh, I try to buy some of foodstuffs I need from the Farmers’ Market on Saturday, and from our own local vegetable suppliers in Peppergrove Mall.

The money I spend on local goods by choice is a form of what in Black Economic Empowerment legislation is called “preferential procurement”. Government’s preferential procurement regulations now require local content as well as black empowerment, because previous procurement regulations allowed tenders to go to BEE firms which simply imported goods to the detriment of domestic manufacturing.

However, local in this legislation simply means not imported or “domestic”. The kind of preferential procurement that would boost jobs and business in Grahamstown, is local in a specific sense of being from Grahamstown or from somewhere in Makana or even Cacadu perhaps. Is it compatible with the legislation I wonder? Makana Municipality or the university, for instance, could comply with preferential procurement regulations by buying from a BEE-compliant company somewhere else in South Africa.

Clearly, our major institutions should have procurement policies that encourage buying locally wherever possible. Not only charity begins at home.