Municipalities Need Urgent Funding Model Reforms To Survive

THEO COVARY|

MUNICIPALITIES in South Africa’s three-tier government have never quite reached the level envisioned in the constitution. Inequalities and mismanagement still run rampant and are not in line with their goal of making services (water, electricity and refuse) accessible and affordable.  

South Africa’s municipalities are in dire straits. They are mired by service delivery failures, poor management, financial mismanagement, billing crises and power outages. The electricity cuts are due to ageing and failing infrastructure, compounded by electricity supply cuts by Eskom. The Auditor-General has said that almost half of local governments are under financial strain and are likely to get worse.

South Africa’s constitution allocates three revenue sources to municipalities to fulfil their mandate: property taxes; surpluses generated from services; and funding transfers from national government. Electricity is by far the biggest contributor among the services, and always has been. But this funding model comes with significant risks.

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