The Potential of AI to Revolutionize South Africa’s Challenged Municipalities
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Many municipalities in South Africa are facing significant challenges. Their infrastructure is deteriorating, finances are tight, and only a minority receive clean audits from the Auditor-General.
Despite this, councils are still required to handle vast amounts of paperwork for awarding tenders, collecting revenue, and ensuring proper management of public funds.
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Glen Jordan, the CEO of housing finance firm Empowa, recognized the potential for AI to help resolve these municipal issues after developing an AI-driven system for mortgage credit approvals.
Tasks that once took days or even weeks can now be completed in a matter of minutes. It makes perfect sense to extend this application to the municipal sector.
The initial challenge is a common one for municipalities: tenders are submitted in various formats, often accompanied by hundreds of pages of supporting documents. Someone must extract the essential information, verify it against the tender specifications, and clarify why a particular bidder was selected.
Jordan explains to the Moneyweb Crypto Pod that AI could swiftly analyze these submissions, extract necessary details for evaluation, and indicate the origin of each figure.
This would allow officials more time to verify the authenticity of certificates, check claims for accuracy, and assess bidders’ capabilities to fulfill contracts.
“The AI isn’t meant to make decisions; it’s designed to assist with the workload,” he states.
The concept developed from Empowa’s experience with data that doesn’t conform to traditional formats.
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Jordan adds that the company has also utilized its technology to evaluate water compensation projects in the US, where a variety of proposals must be assessed against intricate criteria. He sees a similar opportunity in municipal tender processes.
Read: Only 16% of public infrastructure tenders finalized last year
A tender would still be evaluated based on a specific set of criteria, with a human validating the outcome.
AI would focus on gathering and organizing evidence. An official could trace figures back to their respective passages in the initial submission, and any decision to override a score could be documented with an explanation.
“In essence, you can link a figure back to the original document and highlight its source,” Jordan explains.
This safety mechanism is crucial, as AI is capable of making errors. A system that misinterprets a certificate or accepts a fraudulent claim could expedite bad decisions.
Jordan argues that by making source documents, scoring criteria, and human checks visible, it becomes easier to identify mistakes and challenge decisions.
The possible applications of AI extend beyond tender processes.
AI could assist municipalities in analyzing payment behaviors—identifying who is paying their bills and who is not—highlight potential transactions for investigation, and correlate maintenance spending with the performance of maintained equipment.
Rather than waiting for an annual audit, officials and auditors could receive alerts when significant deviations from expected trends occur.
“We should manage by exception, not by sampling,” Jordan affirms.
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The Role of Blockchain
Blockchain could provide a secure record of the entire process: the information considered, the applicable rules, and the decisions made throughout.
Jordan mentions that Empowa leverages blockchain in housing finance to track a buyer’s contributions toward a home, establishing a verifiable payment history.
In a municipal setting, the goal would be to ensure that records of procurement or spending decisions are difficult to alter post hoc.
While blockchain cannot verify the authenticity of a submitted document or determine the soundness of an official’s judgment, such assessments will still require human oversight. Jordan contends its strength lies in providing a record that is open to scrutiny.
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Providing housing to the informal sector using blockchain technology
The blockchain solution: Only 3% of Africans qualify for mortgage financing
However, the most significant challenge may be political. A system that reveals inconsistent scoring, unaccounted decisions, or dubious spending is unlikely to be welcomed by individuals who benefit from obscuring such decisions.
Jordan acknowledges that successful implementation will depend on political will.
For councils willing to embrace it, the initial benefits would be tangible: reduced time spent transferring information between documents and spreadsheets, and increased opportunities for bid evaluation, anomaly investigation, and accountability for decision-makers.
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