Local government are elected to provide services, but many struggle to do this. Photo: Delwyn Verasamy
In April 2025, the department of cooperative governance and traditional affairs released a discussion document on the review of the 1998 White Paper on Local Government. The latter was a bold and necessary step in South Africa’s democratic journey. Its main aim was to redefine and establish municipalities as development engines capable of delivering basic services and driving social and economic development.
Yet, as the past 27 years have shown, its assumptions and prescriptions have not fully aligned with the complex realities facing municipalities and their residents.
The persistent failures of local government are not merely technical glitches; they reflect deeper structural, financial and governance challenges. Therefore, a critical review of the White Paper is not just a bureaucratic exercise but a matter of urgent national importance. For millions of people, municipalities determine whether they have water, electricity, decent roads and a healthy and dignified life. They are the foundation upon which inclusive development, social justice and democratic legitimacy rest.
A central problem facing local government is the widespread failure to deliver basic services consistently. Many are financially distressed and some argue this distress is rooted in the very assumptions and structural arrangements articulated in the White Paper.
Revenue
One key assumption was that municipalities would be able to raise enough revenue to fund the bulk of their operational expenditures. It was anticipated that municipalities would finance 90% of their recurrent costs, including salaries, repairs, maintenance and other daily operating expenses, using their own revenue streams, such as property rates and service charges. In other words, the remaining 10% would be funded by national transfers.
This assumption underpinned the funding model for local government. It implied a local government model that is financially self-sufficient and capable of meeting its constitutional developmental mandates. But years of evidence have shown that this model was overly optimistic — if not fundamentally flawed.
Municipalities in rural or economically marginalised areas struggle with their revenue collection because ratepayers can’t or won’t pay. The former is linked to high unemployment and poverty levels, while the latter could be attributed to administrative weaknesses. Apart from the metros, debt collection rate ranges from an average of between 50% to 75%.
Many rely heavily on intergovernmental transfers that are insufficient to cover operational and capital needs. The over-reliance on property rates and service charges has also exposed deep inequalities, with wealthier urban municipalities faring better than rural municipalities that remain trapped in a cycle of underfunding and underperformance.
As such, the anticipated 90% self-funding benchmark is a structural revenue shortfall that remains elusive in many municipalities with cascading effects on service delivery, infrastructure maintenance, and overall governance. The inability to generate adequate revenue has direct consequences for service delivery. Countrywide, people face persistent water shortages, unreliable electricity supply, deteriorating roads, and poor waste management.
Problems with governance
It is no secret that many municipalities suffer from chronic governance problems, such as the lack of accountability, political instability and infighting, cadre deployment, poor consequence management, and skills shortages. Back in 1998, the White Paper envisaged professional, accountable local administrations; instead, many councils today are beset by instability, political interference and a lack of technical expertise. This undermines both strategic planning and day-to-day operations.
The funding model has inadvertently entrenched spatial and economic inequalities. Affluent municipalities with a stronger revenue base can deliver better services and maintain their infrastructure, while poorer municipalities continue to lag further behind. This perpetuates the legacy of apartheid-era spatial planning and undermines the goals of equitable development and developmental local government.
For the average person, the failures of local government are not abstract policy issues; they are realities that shape daily lives. In short, the effectiveness of local government is a “litmus test” for the health of the country’s democracy. When municipalities fail, people pay the price, and the consequences are immediate and profound:
- Dysfunctional municipalities deter investment, hinder local businesses and restrict job creation, thereby exacerbating poverty and inequality.
- Without reliable municipal services, people are forced to use unsafe water sources and makeshift sanitation, with dire health implications.
- Power outages, potholes and crumbling infrastructure disrupt livelihoods, hinder economic activity and erode public trust.
- Poor waste management and inadequate environmental health services expose people to disease and environmental hazards.
- When local government is seen as corrupt or incompetent, it undermines legitimacy and trust, social cohesion and fuels disillusionment with democracy itself.
Differentiated approach
It is clear that the White Paper must be comprehensively reviewed and reformed. This moment also creates an opportunity to rethink the local government funding model critically. A re-imagined national policy on developmental local government must take seriously the funding model that is supposed to bring it to life.
A differentiated approach is needed, one that recognises the local government history, the diverse capacities and contexts of municipalities. This may require increased and better-targeted national transfers, especially for poorer municipalities, alongside innovative approaches to local revenue generation. Such approaches may typically include a review of the Intergovernmental Fiscal Relations Framework to pursue a truly equitable sharing and allocation of revenue raised nationally.
Reforming local government through a revised White Paper must also be part of a broader strategy to address spatial and economic structural inequalities. This must include targeted investment in infrastructure, support for local economic development and measures to expand the municipal rate base over time.
But improving municipal governance will require both political will and systemic reforms that seek to professionalise local government and strengthen oversight mechanisms to root out corruption. Appointing skilled, qualified officials — rather than prioritising comradeship or political loyalty — must become the norm. This will go a long way toward strengthening local governance and accountability.
As we look to the future, we must learn from the past, confront uncomfortable truths, and forge a new consensus on municipalities’ role, funding, and functioning. This will go a long way in ensuring that all municipalities are “fit for purpose” and capable of addressing the ever-evolving needs for all effectively.
Dr Lungelwa Kaywood is a local government specialist and postdoctoral fellow in the Chair in Urban Law and Sustainability Governance at the Faculty of Law at Stellenbosch University.