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The South African Local Government Association (SALGA) has raised concern over widening financial gaps in municipalities following the release of the 2025/26 Medium Term Revenue and Expenditure Framework (MTREF).
Rising costs for electricity, water, employee wages, and inflation are outpacing revenue collection, leaving many municipalities unable to fund service delivery or maintain infrastructure. A decade-long surge in bulk utility prices is a key driver—Eskom tariffs alone rose by 446% between 2007 and 2019.
Municipal debt is worsening. As of 31 March 2025, municipalities were collectively owed R416 billion, including by government departments. This is hampering their ability to pay creditors like Eskom and maintain vital infrastructure.
Key Challenges Facing Municipal Budgets
Below is a summary of the main pressures highlighted by SALGA:
| Issue | Details |
|---|---|
| ⚡ Utility Tariffs | Eskom tariffs up 446% (2007–2019), Water Boards also increased sharply |
| 💰 Employee Costs | Now growing faster than inflation |
| 📉 Revenue Collection | Declining collection and affordability challenges |
| 📉 Municipal Own Revenue | Covered only 60% of recurrent expenditure in 2020/21 |
| 💸 National Transfers | Only 9.9% allocation to local government—seen as insufficient |
| 🧾 Debt Owed to Municipalities | R416 billion owed by customers, including state entities |
| 🔧 Service Backlogs | Maintenance and infrastructure delays due to lack of funds |
What SALGA Proposes
To prevent further collapse of municipal services, SALGA recommends:
- A full review of the Local Government Fiscal Framework
- A revised wage exemption process for struggling municipalities
- Stakeholder collaboration to clear outstanding municipal accounts
- Public and private sector participation in funding solutions
- Active involvement in the review of the 1998 White Paper on Local Government
Who Needs to Act?
SALGA calls on the following groups to act now:
- Residents: Settle unpaid municipal accounts
- Government departments: Clear bulk service and electricity debts
- Businesses: Collaborate on funding local infrastructure
- Policymakers: Support long-term fiscal reform for municipalities
Official Contacts & Links
- 📧 Email: mmodiba@salga.org.za | tmosala@salga.org.za
- 🌐 Website: www.salga.org.za
- 📱 X: @SALGA_Gov | 📷 Instagram: salga.org.za | 👍 Facebook: SALGA
