The funding model of South African municipalities has come under scrutiny at the launch of a major review of the White Paper on Local Government. Currently, municipalities are expected to generate 90% of their own revenue, with only 10% coming from National Treasury. However, the South African Local Government Association (SALGA) argues that this model fails to account for rising unemployment and stagnant economic growth.
Unrealistic Assumptions Lead to Financial Strain
SALGA representatives highlighted that the current system heavily relies on households’ ability to pay for services—an assumption that has not held up amid worsening economic conditions.
“Our system of government depends on the ability of households to pay,” a SALGA official stated. “The initial assumption was that employment opportunities and economic growth would ensure revenue collection. But this has not aligned with reality, leading to severe financial strain on municipalities.”
Failure to meet revenue targets has left many municipalities in debt, with some owing massive sums to water boards and Eskom. Last year, Eskom attached the bank account of the Emfuleni Local Municipality to recover over R8 billion in unpaid electricity bills.
Calls for Structural Reforms
Mayor Nkosindiphile Xhakaza of an affected municipality emphasized the need for structural reforms, particularly in response to rapid urbanization.
“How do we fund municipal services when communities are migrating to cities in search of opportunities?” Xhakaza asked. “Did the White Paper anticipate these challenges? We need solutions now.”
The review was prompted by widespread service delivery failures, corruption, and mismanagement of government grants—issues that have led to the dissolution of some municipalities.
A Push for Accountability and Public Participation
One of the key goals of the White Paper review is to strengthen accountability and transparency in local governance. The government is advocating for a more participatory approach, encouraging communities to engage with municipal institutions.
South Africans have until June to submit their comments on the proposed changes. Public input will play a crucial role in shaping the future of local government funding and service delivery.
As the review unfolds, stakeholders hope it will pave the way for a more sustainable and equitable system—one that can withstand economic pressures while ensuring essential services reach all citizens.