The rate of unemployment is South Africa remains persistently high and, coupled with the pressure of the world recession and escalating commodity prices, the cost of living continues to soar. Now, more than ever, the need for self-employment in the form of private businesses and CBOs is critical.

However, several CBOs and SMMEs across the country constantly experience stunted growth. Many CBOs have low human and material capacity to help carry out their envisioned activities. Financial resources allocated by the government to support CBOs and SMMEs often don’t reach the intended targets, but instead lands in the pockets of corrupt officials.

Government tenders intended to uplift upcoming small, medium and well-established businesses, have enriched some municipal and government officials instead. Many such officials own registered companies and CBOs that are also registered on government database. Tenders are awarded to their companies, or alternatively to relatives, who own companies, without following the proper procedures and often, tenders are awarded to companies willing to pay a bribe. In some cases livestock, chicken, goats and tractors are obtained by corrupt officials using names of registered CBOs. Sadly, corruption in the form of bribery, extortion, embezzlement, nepotism and graft is rife in local government systems.

Earlier this year, officials in the Alfred Nzo District Municipality were arrested following an investigation that was started in 2005 regarding a R52m sanitation project. Ten officials were arrested for allegedly defrauding the government of R28 million. The irony is that the district is rated among the poorest in the Eastern Cape, one of the places where poverty alleviation initiatives are, arguably, most needed.

The Alfred Nzo district has an HDI (Human Development Index) as low as 0.49. As much as 76 percent of the population lives in extreme poverty. To make matters worse, household income for 70 percent of the inhabitants is less than R18 000 a year. More than 41 percent of the residents are without running water. The situation calls for a radical intervention by all stakeholders, including statutory bodies.

At the Sundays River Valley municipality, an audit uncovered gross financial mismanagement, fraud, corruption and shameless flouting of procurement procedures. Among the 1 140 service providers on the municipal database, 59 turned out to be municipal employees and while 42 were indirectly linked to municipal employees. Furthermore, the report reveals that two companies were awarded contracts for which they did not tender. Similar cases exist right across the country where many municipal officials are implicated in corruption practices that deprive the poor of opportunities to improve their livelihoods.

Recently, a construction company based in East London was asked by an official from the KSD Municipality, to pay a R6 million bribe to be awarded the R50 million contract to build a Stadium in Mthatha.

The numerous acts of corruption that have rocked municipalities across the country reflect a serious leakage of public revenue that would, otherwise, have been used to alleviate poverty. Sadly, corruption is starting to be perceived by communities as the normal way of doing things or of getting certain services from municipality offices. It has resulted in apathy and despondency in communities where most people no longer believe in forming structures to access government funding. Where nepotism is rife, people believe you have to be related to officials in order to get government funding.

A study conducted by the Community Based Organisations’ Coalition (COMBOCCO) in Durban regarding CBO performance reveals that CBO relationships with local authorities at municipal level have been marred by political agendas of government officials. CBO leaders are not entirely immune to the problem, either. There is too much bureaucracy to get CBOs listed as service providers in any municipality’s database. Most CBOs, therefore, fall out of the scope of being service providers.

In many cases, recognition of CBOs within the municipality relies heavily on how much a CBO leader is known by government officials. Recognition usually goes with expectations of returning a favour and, by implication, lead to bribery and corruption. Often officials, including ward councillors, view CBOs as competitors and political threats when they advocate for local development projects and service delivery.

Across South Africa, the terrain laid out for CBOs and SMMEs is full of hurdles. As a result, many emerging businesses and CBOs fail to survive.

Seemingly, government interventions against corruption are ineffective. Consequently, public officials are not sufficiently accountable and transparent to the citizens and they appear to be getting away with a lot of punishable acts of impropriety. As corruption in municipalities and government departments continues to escalate in South Africa, efforts to eradicate poverty and transform our socio-economic order will continue to be undermined, particularly in rural areas.


Corruption and the Constitution
“Corruption and misadministration are inconsistent with the rule of law and the fundamental values of our constitution. They undermine the constitutional commitment to human dignity, the achievement of equality and the advancement of human rights and freedoms. They are the antithesis of the open, accountable, democratic government required by the Constitution. If allowed to go unchecked and unpunished they will pose a serious threat to our democratic state.” Judge Arthur Chaskalson, President of the South African Constitutional Court, 2000.

Below the Bread Line
According to the South African Institute of Race Relations (SAIRR) Survey, the number of unemployed South Africans, using the strict definition of unemployment, increased from nearly 2 million to 4.3 million people between 1994 and 2007. The unemployment rate increased from 20 percent to 25.5 percent over the same period. The province with the highest rate of poverty was Limpopo, with 34 percent of the population living below the poverty line of R250 per month. KwaZulu-Natal, the Eastern Cape, Mpumalanga and North West all had 25 percent or more of their population living on less than R250 per month (SAIRR Research Team 2008).