By Odwa Bafana Mkentane
South Africa’s economic recovery is being undermined by growing municipal dysfunction, with failing local government services emerging as a significant constraint on investment, business activity and long-term growth. Reserve Bank Governor Lesetja Kganyago warned that while the economy entered the year on a positive footing, rising fuel prices and heightened uncertainty weakened household spending and investment. Although the Reserve Bank expects economic activity to improve in the second half of the year as these pressures ease, Kganyago cautioned that structural challenges at the municipal level continue to weigh heavily on the country’s growth prospects.
Economist and senior lecturer at Wits University, Dr Lumkile Mondi, says corruption and poor management at the municipal level undermine municipal growth.
“Many of the municipalities in South Africa are not economically viable, and by that, I mean they don’t have a tax base where they will be able to collect revenue for services and thereby effectively meet their mandate of service delivery to the population of that locality. So therefore, we need to rethink how the whole municipality system is set up. What concerns more to the question raised by the governor is about the metropolitan areas, where even a number of them are not viable, not because of low tax payments or an absence of tax payments but because of poor management, corruption and political parties focusing on their own interests rather than the interests of the ratepayers,” said Mondi.
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