South Africa’s capital collapsing in front of everyone’s eyes

The City of Tshwane is struggling with infrastructure collapse and a decline in essential services. It is also slow to act on irregular and wasteful expenditure and financial misconduct.

The problems with water delivery, the road network, and electricity infrastructure have been well documented over the last few years.

Last month, Tshwane implemented load rotation in parts of the city to reduce pressure on its power grid. Illegal connections and cable theft caused the problems.

“Pressure on the city’s transformers and substations during peak hours has necessitated the implementation of load rotation to avoid a total collapse of the electricity grid,” it said.

The Democratic Alliance (DA) in Tshwane highlighted that there was a rising occurrence of cable theft and vandalism of electricity infrastructure.

“Cable theft and vandalism of electricity infrastructure have gotten worse, leaving the residents, businesses and even hospitals without electricity for days on end,” it said.

Alfred Makhafula, the DA Tshwane spokesperson on community safety, stated that over R500 million is lost annually due to cable theft and vandalism.

Earlier this year, Rand Water issued a warning to Tshwane residents, urging them to reduce their water consumption or face a total system collapse.

It said Tshwane was consistently exceeding its allocated water quota, exacerbating pressure on already strained resources.

The DA said Tshwane’s water systems are failing, with communities like Hammanskraal experiencing years of unreliable and contaminated supply.

It added that municipal water infrastructure continues to deteriorate from a lack of maintenance.

The city’s road network is also under severe pressure. It struggles with thousands of potholes, and it can take years to fix sinkholes, which disrupt traffic flows.

There are also serious crime concerns in the capital city, with high incidents of violence, robbery, and assault.

Last year, Tshwane said that there was an increasing culture of lawlessness in South Africa and, by extension, Tshwane.

“Porous borders, poor economic growth, load-shedding and various other factors have led to an increase in crime and by-law infringements,” it said.

The Auditor General raises concerns about the Tshwane Metro

The Auditor General (AG) released a report that showed Tshwane was one of the worst-performing metros in South Africa.

The city received a qualified audit for the 2023/24 financial period, which means there were material misstatements found within its financial statements.

This is troubling as it signals poor financial management and reporting within the Tshwane metro.

The Auditor General reported that Tshwane’s reported financial statement and performance reports were of poor quality.

It also stated that, although the Auditor General informed the metro of misstatements, Tshwane was unable to make the required corrections.

The AG noted that Tshwane was slow to investigate irregular expenditure, wasteful expenditure and financial misconduct.

Unsurprisingly, the metro reported significant material irregularities in its financials over the past few years.

In 2019 and 2020, Tshwane procured software licenses that were never used, which resulted in a financial loss of R99 million.

In the 2021/22 financial year, Tshwane awarded a R617 million contract to consultants, but did not implement adequate controls to review the consultants’ work.

This resulted in material misstatements and payments made to the consultants for work that was not done.

Tshwane’s poor credit rating

Tshwane’s ability to repay debt is also in a very poor condition, which affects lenders’ willingness to offer financing to Tshwane.

It also increases the borrowing cost at which the metro can obtain financing, which puts more strain on the taxpayer.

This is reflected in Tshwane, together with Ekurhuleni, having the worst credit ratings of all South African metros. It obtained a Caa2 credit rating, which is very low.

A Caa2 credit rating represents an institution with an extremely speculative credit rating and signals very high credit risk.

Tshwane also received a negative credit rating outlook, which means that Tshwane’s credit rating has a higher probability of a credit downgrade.

If Tshwane’s credit rating were downgraded further, it would reach a Caa3 credit rating, which signals extremely high credit risk with a high default probability.

The Auditor General mentioned that rating agencies have downgraded Tshwane due to its declining revenue collection.

This alarmed rating agencies as it signals a lower ability to repay debt obligations and a higher risk to creditors.

Tshwane had significant budget shortfalls due to poor revenue and debt collection. The metro wrote off 72% of debts owed to Tshwane, which led to a further inability to cover its own debt.

Over the past 3 years, Tshwane had the largest amount of fruitless and wasteful expenditure of all the metros in South Africa, amounting to R3 billion.

In light of these serious problems at Tshwane, the Auditor General stated that the metro is still struggling with “the basics”.

Tshwane has, for the past four years, cast significant doubt on its ability to continue operating as a going concern.

Fruitless and wasteful expenditure

City of Tshwane’s collapse in photos