Frustrated by lack of progress on key infrastructure projects in the Makana Municipality. Philip Machanick the Chariperson of the Grahamstown Resident Association, is suggesting this as a solution to stop patronage on infrastructure projects . Do you agree with him? Is his solution too simplistic?
Who gains from incompetent tender awards? and this leads me to another question. What particularly favours this development and how can that be changed?
Government awards contracts like on the condition that 30% be awarded to local SMMEs. That, on the face of it, looks like a good idea, in an economically-distressed region particularly. But there is a flaw in the concept. If a local economy is depressed, patronage has extra power because the only resources to be had flow from the government. Consequently, there is a temptation to steer contracts away from contractors with a strong track record towards those most likely to be compliant with rewarding patronage networks. So the 30% SMME fraction becomes the patronage slice.
This would not be such a bad thing if the job got done. As infrastructure shortfalls are remedied, the investment climate improves leading to more work. Recipients of patronage, even if not super-productive, add to local wealth.
The problem is that this model perversely incentivises failure. Why? Because if the project fails and it is essential infrastructure, it has to be done again. And the patronage networks are greased again. Worse: if infrastructure continues to fail, government funding becomes the only game in town, making patronage all the stronger.
The solution?
If the government wants to promote development of SMMEs and local skills, they should make that a separate project. Also, heavily police essential infrastructure projects for wrongdoing – throw the full weight of the law at any misconduct or corruption: SIU, lifestyle audits, the works.
If the government wants to promote development of SMMEs and local skills, they should make that a separate project.
If the patronage slice is now a separate budget, it’s bad if it goes astray, but not the end of the world. If we carry on with decaying sewerage, water, roads and power infrastructure, the government becomes a ponzi scheme and there is no new income to pay for further development. Even the corrupt in the end lose as they become parasites killing the body they feed off.
So the remedy is simple.
The cost of not doing this?
An economic death spiral. Nationwide we are suffering an investment strike and our local economies are not better. More businesses are closing than opening; houses are hard to sell; jobs are scarce. Don’t tell me this isn’t a problem.
If my solution isn’t the right one, let’s hear others. One thing is for sure: we need a new approach because the old one isn’t working.
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