MICHAEL MORRIS: Cape Town sets benchmark in value-for-money procurements - Business Day

Michael Morris
As we contended with yet another bout of unwelcome blackouts last week, a signal City of Cape Town initiative came as a sober reminder of why “wealth-shedding” more appropriately describes Eskom’s approach to not serving the national interest. 

Cape Town modestly calls its inaugural Value for Money Report a “new transparency measure”. It is, in fact, an indicator not just of governance in the Mother City but of how other metros and institutions of government can embark, as they inevitably must, on deferred reform.

A clue to the initiative’s wider significance was its launch by mayor Geordin Hill-Lewis not in his mayoral suite but at the Investment One Stop Shop in St George’s Mall in the central city.

This facility, operated by Wesgro and the Western Cape government, is a “multifaceted collaboration between national, provincial and local government” to “offer fast-tracked services and to cut the red tape that may be experienced by investors seeking to set up or expand business interests in the SA market”.

In other words, it is not a party-political gimmick. The one-stop shop “clusters key government departments and agencies under one roof, creating the convenience of providing investors with a single point of service”, where it is possible to consult the SA Revenue Service; the departments of trade, industry & competition, labour and home affairs; the red tape reduction unit “and others” — including the city’s administration.

Last Monday, Hill-Lewis explained how Cape Town “is achieving 79% of its procurements at below-market rates for a range of goods and services essential to service delivery”.

The seeming improbability of this claim is a stark counterpoint to much other news — Volkswagen expressing serious concerns about the future viability of its SA operations, for example, or the World Bank finding that crime is costing SA about 10% of GDP every year — about R700bn in 2023.

The Value for Money Report is at once a benchmark — Hill-Lewis challenged other metros to follow suit, and they will be judged from here on by their success in following Cape Town’s lead — and a symbol of a not merely desirable but realisable future.

The report, which analyses more than 2,000 contracts and 300 commodities classified as essential to service delivery in 2021/22, attributes Cape Town’s value-for-money procurements to “leveraging economies of scale, successful negotiating strategies and competitive pricing by suppliers”. 

Examples are coarse gravel for roads bought at R239.40/tonne versus R527.68; fire hydrants for R2,242.50 versus R4,025; general mowing and verge trimming for 9c/m² versus 25c/m²; and an installed CCTV system for R20,398.70 a unit versus R32,375.60. 

Eskom and load-shedding don’t really come into it, except by barely credible comparison; Cape Town pays R11 for a litre of milk to Eskom’s R21; 93c for a black refuse bag to Eskom’s R51; and R3.02 for a one-ply roll of toilet paper to Eskom’s R26.

Renegotiating milk, toilet paper and refuse bag purchases is not going to meaningfully reduce Eskom’s latest projected R23.2bn loss, its seventh annual loss in a row. But the principle is eloquent, and one whose application is both urgent and indispensable across a vast and expensive state.

Without the “transparency”, the “more competitive economic activity”, or the “public value from municipal spending” that Hill-Lewis extols, growth and all that comes with it — jobs, new business, more tax, better services and better lives — will remain beyond everyone’s reach, from the dwindling ranks of the hard-pressed middle class to the millions of jobless poor who remain economic outsiders in their own country.

Morris is head of media at the SA Institute of Race Relations.

https://www.businesslive.co.za/bd/opinion/columnists/2023-12-04-michael-morris-cape-town-sets-benchmark-in-value-for-money-procurements/