Local elections are crucial to rescuing South Africa’s municipalities

Growing dysfunction in municipalities is increasingly holding back the country’s economic growth. Picture: Nigel Sibanda Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso believes this year’s local government elections could prove to be one of the country’s most consequential, arguing that the leaders elected on 4 November will have the daunting task of restoring South Africa’s failing municipalities. Her comments come as the financial health of local governments has come under intense scrutiny following Finance Minister Enoch Godongwana’s decision towithhold portions of the Local Government Equitable Sharefrom municipalities that failed to meet prescribed conditions.

While intended to enforce greater accountability and improve governance, the intervention did more harm than good by putting already cash-strapped municipalities in an even weaker position, further exposing the deepening crisis in local government finances and service delivery. Mavuso, speaking at the latest PSG Think Big webinar, said municipalities are the engines of local economies; they provide the infrastructure, services, and governance that businesses rely on to invest, to create jobs, and to grow. Yet, across much of the country, deteriorating service delivery, weak finances, and governance failures are undermining confidence and holding back that economic potential.

This could hurt the country’s economy. Thissentiment has also been shared by the Governorof the South African Reserve Bank (Sarb) Lesetja Kganyago. He warned that growing dysfunction in municipalities is increasingly holding back the country’s economic growth.

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“This year’s municipal elections are rather important,” said Mavuso. “They are important because when you look at the state of our municipalities, a lot of them are seriously eroding, deteriorating, and failing to provide the basic services for which they were designed to provide.” Mavuso said failing municipalities have direct implications for business confidence and investment. As municipalities struggle to deliver reliable services, companies are increasingly being forced to absorb the cost of state failure.

While the full cost of municipal dysfunction is difficult to quantify, Mavuso warned that businesses often respond by redirecting investment elsewhere. “A lot of businesses quietly choose to disinvest, without making too much noise.” The BLSA CEO highlighted that Johannesburg has become a central concern, as the city’s decline is no longer a local issue alone because it is the country’s commercial capital. “Remember, Joburg is key to the South African economy.

This is where 16% of the country’s GDP is generated. So, its performance is critical to national growth. Joburg’s decline has reached a point where silence would be irresponsible from a business perspective.

The situation has become urgent. “We (BLSA) refuse to accept that Joburg’s decline is inevitable. We refuse to accept that the failure of the city of Joburg should be normalised.”

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