Municipal meltdown: Hlabisa blames debt crisis on failing revenue collection
Image: Department of Cooperative Governance and Traditional Affairs / Facebook
Municipalities are drowning in debt largely because they cannot collect the money they are owed, according to Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa.
Hlabisa made the remarks Monday at a national dialogue in Midrand, north of Johannesburg, under the theme "Every Municipality Must Work – A Call to Collective Action."
More than 300 representatives from political parties and municipal councils gathered to reflect on the relevance of the 1998 White Paper in the context of local government performance.
Hlabisa emphasised that the gathering was intended to facilitate open dialogue rather than deliver firm decisions.
'As we embark on this critical process, we recognise the crucial role political parties play in shaping the future of our local government system,' Hlabisa said.
'Local government is where policies become services, promises become infrastructure, and governance becomes tangible.'
He said that while some municipalities are performing well, most are underperforming, plagued by financial mismanagement, poor governance, and over-reliance on consultants.
'All 257 municipalities in South Africa are governed by political parties, either through majority or coalition governments,' he said.
'We therefore recognise the central role of political parties and value your input as we seek to improve the White Paper on Local Government.'
Many municipalities in the country are facing tough times, with many re-dealing with financial pressure, outdated infrastructure, poor service delivery, and leadership challenges.
These problems often come as a result of weak financial management, corruption, a shortage of skilled staff, and too much political interference.
Hlabisa said the failure of municipalities to generate sustainable revenue, particularly in under-resourced or geographically disadvantaged areas, has left many unable to meet basic obligations like paying salaries or contributing to pension and medical aid schemes.
'A one-size-fits-all approach will not solve these issues,' he said.
'We need a differentiated strategy and must consider running municipalities like businesses - with appropriate funding, structures, and remuneration for councillors.'
Meanwhile, Auditor-General Tsakani Maluleke has voiced support for the ongoing review of the 1998 White Paper on Local Government.
'I just want to put on the table that our reflection as an auditor office is that the 1998 White Paper was fantastic.
'It's good to review it…but that must be followed by a very bold and courageous assessment and recommitment to implementing it. And implementing it as I see it, it's going to take political parties genuinely thinking about who were deployed to take on the rule and responsibilities in the municipal space.'
IOL News previously reported that Maluleke's 2023 and 2024 local government audit report, tabled in Parliament last week, echoed Hlabisa's concerns.
Only 41 municipalities received clean audits. While 59 municipalities improved since the 2020 and 2021 financial years, 40 regressed.
Maluleke said that 99 municipalities received unqualified audit opinions, meaning their financial statements were credible.
However, many had significant compliance and performance reporting issues. Of these, 71 failed to submit quality financial statements and relied on auditors to correct errors.
In total, 219 municipalities spent R1.47 billion on consultants for financial reporting, yet 130 still submitted flawed financials - which highlighted the ineffective spending.
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