By Thebe Mabanga
The local government sector, now under intense scrutiny as the next focus of government reforms, is set to receive R552.7 billion in equitable shares from the fiscus over the next three years, with provinces slated to receive R2.4 trillion.
This was revealed by Minister of Finance Enoch Godongwana when he tabled the third iteration of the Budget in Parliament on Wednesday.
Godongwana said that the division of nationally raised revenue among the three tiers of government remains a bone of contention.
Organisations such as the South African Local Government Association (SALGA), which represents municipalities, continue to call for the sector to receive 40% of nationally raised revenue, as opposed to the current level of just under 10%.
At the recent launch of Operation Vuindlela II, the second phase of the government reform one of the objectives is to “improve the performance of local government.
This includes professionalising utilities, appointing suitably qualified people to senior positions, and reviewing the local government fiscal framework.
The profesionalising of utilities entails establishing metro trading companies for Water, electricity and eventually, waste collection.
The trading companies would then be contracted to municipalities as their clients.
At the launch of Operation Vulindlela II, National Treasury cited an instance where a metro collected R10 billion in revenue in from water reticulation but only directed R2 billion towards maintenance.
The metro trading companies would ring fence revenue and redirect it towards maintenance.
The move has potential to be resisted by municipalities, who protect their key sources of revenue fiercely as they did against the formation of Regional Electricity Distributors (REDs) in the early 2000s.
Gododngwana pointed out that in 2025/26, 83% the local government equitable share will provide a free basic services package of R610 per month to 11.2 million poor households.
The minister emphasised the importance of service delivery for the viability of local government.
“The reality is that sustainable local government finance does not depend merely on enforcement mechanisms, but on delivering genuine value to communities.” he said, noting that declining revenue collection rates are often a function of the quality of the services.
“Municipalities must recognise that quality service delivery is not just a constitutional obligation but also the cornerstone of their own financial viability.” he said.
A total of R1.4 billion has been allocated to support the preparations for the upcoming Local Government Elections in 2026.
Of this allocation, R885 million is earmarked for the Independent Electoral Commission (IEC), while R550 million is dedicated to the South African Police Service and the South African National Defence Force to maintain public order.
This investment contributes to upholding the democratic processes and ensuring that every South African can exercise their right to vote in a safe and secure environment.
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