Why 84% of South Africa's Municipalities Are Failing:
A Crisis of Competence and Accountability South Africa's municipalities are in a state of systemic collapse. According to the Auditor-General's 2024/25 report, only 41 out of 257 municipalities received clean audits, while the rest are plagued by financial mismanagement, poor governance, and service delivery failures. This means over 84% of municipalities are underperforming, and the consequences are felt daily by millions of South Africans.
From Self-Sufficiency to Dependency
Before 1994, most municipalities were largely self-sufficient, generating their own revenue through property rates, service charges, and local economic activity. Central government transfers were minimal, and local administrations were expected to balance their books.
In stark contrast, the 2024/25 Division of Revenue Bill reveals that municipalities now rely heavily on national transfers. While exact figures for pre-1994 transfers are difficult to quantify due to the fragmented apartheid-era governance system, the shift is clear: modern municipalities receive billions in equitable share allocations and conditional grants, yet many still fail to deliver basic services.
The Salary Paradox: Politicians vs. Professionals
One of the most glaring contradictions in local governance is the disproportionate remuneration of councillors and politicians, many of whom lack the qualifications or experience to manage complex municipal systems. In some cases, councillors earn more than senior professionals in the private sector, despite presiding over dysfunctional administrations.
Minister Velenkosini Hlabisa recently acknowledged this issue, stating that low-quality leadership and political interference are undermining municipalities. He called for a bold review of how councillors are selected and compensated, suggesting that municipalities should be run more like businesses to attract skilled professionals.
Inefficient Billing Systems and Data Integrity Failures:
Many municipalities still rely on outdated or fragmented billing systems that are prone to errors, duplication, and data loss. These systems often fail to capture accurate consumption data, leading to incorrect bills that erode public trust. In some cases, residents receive no bills at all, while others are billed arbitrarily, prompting widespread non-compliance.
Water R13.89 Billion and Electricity R19.12 Billion Distribution Losses in 2024/25:
A Deepening Fiscal Drain The 2024/25 financial year reaffirmed a troubling trend: municipalities are losing billions of rands in unbilled and unpaid services due to technical and non-technical losses in water and electricity distribution. These losses are not just accounting anomalies—they represent a systemic failure in infrastructure management, enforcement, governance and financial system management.
Municipal infrastructure assets at risk:
The Auditor-General's 2024 report warned that deteriorating infrastructure is directly linked to poor maintenance and lack of asset safeguarding, with over R518 billion in municipal infrastructure assets at risk
Recent reports and dialogues have highlighted several compounding factors:
Revenue Collection Collapse:
Many municipalities are unable to collect payments for services rendered. Households owe municipalities over R230 billion, reflecting a broken social contract.
Over-reliance on Consultants:
In 2024 alone, municipalities spent R1.47 billion on consultants, yet 130 of them still submitted flawed financial statements.
Corruption and Nepotism: Political manipulation and unethical practices have become entrenched, with municipal resources often diverted to fund party operations.
Lack of Skilled Staff:
Rural and distressed municipalities struggle to attract competent engineers, accountants, and managers due to poor working conditions and inadequate pay.
Infrastructure Decay:
Water and sanitation systems are failing, jeopardizing South Africa's ability to meet Sustainable Development Goals.
Weak Integration with Traditional Governance:
The exclusion of traditional leaders from municipal planning has created disconnects in community engagement and service delivery.
Conclusion:
A Call for Competency-Based Governance
The crisis in South Africa's municipalities is not merely financial—it is structural and political. Until competency, accountability, and community-driven oversight become the foundation of local governance, no amount of national transfers will fix what is fundamentally broken.
The time has come to rethink the role of local government, restore professional integrity, and empower communities to hold their leaders accountable. Anything less will only deepen the dysfunction.
Information Sources:
Independent Online (IOL) - Municipal Debt Crisis (https://www.msn.com/en-za/news/other/municipal-meltdown-hlabisa-blames-debt-crisis-on-failing-revenue-collection/ar-AA1Hf0vV)
SA news - Skilled Problem Municipalities (https://www.sanews.gov.za/south-africa/call-treat-municipalities-businesses-attract-skilled-staff)
SABC News - Lack of Revenue Base (https://www.sabcnews.com/sabcnews/poor-performing-municipalities-attributed-to-lack-of-revenue-base/)
The Star - White Paper 1996 Review (https://mpoa.co.za/%20https://thestar.co.za/mercury/2025-05-26-fixing-south-africas-ailing-municipalities-white-paper-on-local-government-under-review/)
Independent Online - Water and Sanitation needs (https://www.msn.com/en-za/news/other/south-africa-struggles-to-meet-water-and-sanitation-goals-as-municipalities-fail-to-maintain-infrastructure/ar-AA1Gva4E)
Davdiscourse - Municipal Debt R416.1 Billion (https://www.devdiscourse.com/article/law-order/3463966-sa-municipal-debt-hits-r4161bn-as-treasury-flags-spending-and-grant-gaps)
The Witness - Auditor-General Report Poor Management + more (https://witness.co.za/news/kzn/2024/08/28/ag-report-poor-management-wasted-funds-plague-sa-municipalities/)
Meridian Economics - Municipal Electricity Distribution Crisis (https://meridianeconomics.co.za/wp-content/uploads/2024/11/Overview-of-municipal-electricity-distribution-challenges-final.pdf)
National Treasury Capital Budgets (https://www.gov.za/news/media-statements/national-treasury-publishes-operating-and-capital-budgets-municipalities)