Bruce Whitfield | What failing municipalities cost business. Plus: What is Nawty Water?

Literally, and huge metros which have become cash cows for billionaires. Lisette Eisel de Schiepe is the chief economist at the Bureau for Economic Research. And Lisette, talk to me about the fact that municipalities are seen as a political story, but my goodness me, the economic cost of dysfunction, the cost to businesses, the cost to local economies around them has been massively, massively significant, hasn't it? It has, certainly. I think there's

Direct costs and the indirect costs that come from municipalities not working as they should. As you mentioned, it brings directly higher operating costs. Businesses, they do pay municipal rates, they pay services charges, and then they have to go pay again for backup electricity, water storage, security, and other alternatives. Then you've got interruptions resulting in lost productivity. Smaller businesses, in particular, are suffering disproportionately from that. A large firm can perhaps afford a private alternative.

Smaller businesses just can't do that. The bigger cost is, as you mentioned, possibly the investment that never happens. Businesses postpone expansions, they scale back projects, or they have to invest in alternative measures rather than extending capacity. Now, cities are also metros in particular is where you should generate your economic efficiencies. So, if your metros are not working, the impact on the rest of the national economy is actually bigger than one would expect.

And I think another issue that we could perhaps highlight is that we're slowly but surely starting to make progress on some of the big national reform stuff. Big story, obviously, electricity supply, the end of nationwide load shedding. We're making slow progress on logistics. But if you then don't have the municipalities working, you don't see the national benefits flowing through to businesses on the ground. So it's not just what they spend on municipal dysfunction, but it's also the counter.

Factual of what they would have spent and what they would have spent it on in a different economy. Absolutely. And I recall a couple of years ago on holiday in Spain and driving through rural Spain and going past lots of villages and saying to my then 16-year-old son who was just starting out studying economics, saying to him, What's the difference do you see here versus South Africa? And he said, Well, every small town seems to have factories and they have really good roads and there's a railway line nearby that seems to be working because there are lots of trains running.

And there's running water in rivers. And so, yes, the environment is suitable. But he says it just feels like people make small towns work better. And I thought that was a very smart observation for a 16-year-old budding economist, maybe one day. But that has been one of the great failures: we've had so many companies give up on towns, having to move to other municipalities. That has a huge local impact in terms of jobs and optimism. And the picture you never get is what could have been invested had the place.