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Government’s funding model for municipalities needs a complete overhaul

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Chris Pappas is the mayor of uMngeni Local Municipality.

The current funding model does not adequately account for the unique challenges faced by different municipalities. It is unacceptable for municipalities to be left to fend for themselves without the necessary financial support from the national government, given their responsibility for delivering essential services and their proximity to the people they serve.

The state of municipal governance in KwaZulu-Natal (KZN) is a major concern. Some of the reasons for the continuous decline have been inflicted by the historic establishment of wall-to-wall municipalities. 

Municipalities have been set up to fail by including very low numbers of people able to afford rates and services who subsidise those who cannot pay. Despite this income generation gap, municipalities are still required to provide services to 100% of the population. 

To compound this, the funding model for municipalities from the national government is outdated and fails to support the constitutional mandate of local government. The equitable share allocation does not go far enough to address the expectations placed on local municipalities. And, lastly, municipalities have very limited legal mechanisms to generate revenue.

We must acknowledge the systemic failures that have led to this state of affairs. The legacy of apartheid and colonialism has created vast inequalities between urban and rural areas, with rural communities receiving inadequate service delivery. 


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In democratic South Africa, poor governance, State Capture and corruption have added to the legacy of disparity. Moreover, continued economic decline and the inability to create jobs in the economy have left many residents unable to pay for services. 

Coupled with the looting of public funds, an under-capacity of municipal administrations and an unskilled public service, these problems have worsened. Simply put, many rural municipalities, no matter how well run, would struggle to break even.

To address these issues, the funding model for municipalities from the national government needs a complete overhaul. Local government is crucial to achieving the constitutional mandate, and the lack of support from the national government undermines its effectiveness. 

The current funding model does not adequately account for the unique challenges faced by different municipalities. It is unacceptable for municipalities to be left to fend for themselves without the necessary financial support from the national government, given their responsibility for delivering essential services and their proximity to the people they serve.

Another factor that limits the success of municipalities in KZN is the limited number of legal mechanisms to generate funds. Alternative methods of revenue generation, such as municipal bonds, public-private partnerships, more equitable share and increased benefit of already taxed goods and services, need to be explored in consultation with local communities to ensure the viability and sustainability of municipalities. 

The implications of the current state of municipal governance in KZN are significant, affecting service delivery, social cohesion and economic growth. All stakeholders must work together urgently to address the systemic issues that have led to this situation. 

The most important driver of this reform must be the national government through the executive and Parliament. The national government must take responsibility for its role and take concrete steps to address the issues. 

Municipalities must also be proactive in exploring alternative mechanisms for revenue generation, provide services and address developmental backlogs without overburdening residents and businesses. 

The current state of municipal governance in KZN is alarming, and the systemic failures contributing to this state of affairs must be addressed urgently. This starts with an overhaul of the powers and functions of local government as well as the funding models. DM

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Comments - Please in order to comment.

  • Robert Pegg says:

    The decline in Municipal services started 30 years ago. Instead of Mayors and Councilors offering their time at no cost, we now have paid Mayors and Councilors, and a lot more of them. Staff budgets have exploded with many departments overstaffed by giving jobs to family and friends. Nepotism is rife in Municipal departments. The only Municipalities in the black are ones where the majority of residents pay for services they receive. Why is the Western Cape government that only Provincial government that subsidizes Fire Brigades ? Most Municipalities struggle to finance a 24 hour Fire Brigade service, which is a Municipal function. This needs to be changed before the next disaster happens.

  • carollyn says:

    National Government must fund municipalities – However, Local Authorities need to right size, cut their costs and realign their business plans to remain relevant. The current failures in respect of service delivery, ongoing maintenance and upgrade of infrastructure, skewed opex and capex budgets, massive service charges etc has created a ground-swell of community cynicism and no-confidence in municipal ability. Political management at local level is a failure. Local Authorities need strong technical, planning and implemetation know-how – professionally run city/ town/village departments with the necessary budget to deliver and maintain services.

  • Dennis Bailey says:

    With you, Chris. So make some concrete proposals for Umngeni, please. Waiting for the national government to get off its behind will be like waiting for Godot. But any proposals that might fly must, as its starting point, plan and fund the abolition of looting.

  • Spencer Eckstein says:

    Hi Chris – so admire your work in KZN but is the issue not: 1. the location, 2. the viability/sustainability (in terms of tax /revenue base) and the number of municipalities (257 = 8 metros, 44 districts, 205 local municipalities at last count), so first you have to address the institutional arrangement (including constitutional mandate), then the funding model can be addressed?

  • Jon Quirk says:

    Tax-payers, a diminishing risk pool, at all levels are expected to bear a vastly disproportionate amount of the costs, of not only a grossly bloated government – at all tiers – but also the entire cost of government’s social engineering, and are often the only secure who actually PAY their bills.

    The proverb of the straw and the camel’s back come to mind. South African society is presently stretched taut very much to breaking point. Government MUST get the economy and job creation moving post haste – failure will take us all down the tubes.

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