Newly elected KwaZulu-Natal premier Thami Ntuli. Photo: Mbuso Kunene
Government departments owe KwaZulu-Natal municipalities R3 billion for rates, water and electricity, the highest level this debt has reached in the history of the province.
And households, crippled by high interest rates and mortgage bond repayments, as well as rising electricity and fuel prices, are also battling to keep up with municipal payments for rates and services.
Municipalities that have been placed under administration to improve their functioning and service delivery are also costing the government R1 billion in salaries, with little improvement to show for their investment.
This was the dismal picture the South African Local Government Association (Salga) KwaZulu-Natal chairperson, Thami Ntuli, painted of the state of municipalities in the province at a media briefing in Durban this week.
“Government debt for municipal services in KZN has now passed the R3 billion mark for the first time in the history of this province,” Ntuli said. “When government and businesses fail to pay or delay paying for the water, lights, rates and refuse removal services they receive, municipalities often have to secure commercial bank loans to ensure that projects do not grind to a halt.”
Salga’s provincial deputy chairperson, Sabelo Gwala, said the R3 billion had risen from R2.5 billion in April 2023. The sum was owed mainly by the departments of health, education and public works for rates and water, and to some extent for electricity.
“It is proving difficult to collect when it comes to rates and water specifically. We have to implement credit control where debt is owed. Unfortunately, when we contact the provincial department they say money is with the school governing body and they say they have not received money from the government to pay for services and the back and forth leads to municipalities switching off [services],” Gwala said.
“This is a grave concern and this figure, before the current administration, was as low as R500 million, and this has tripled in size.”
Ntuli said households were also battling to pay their municipal bills and the government was setting a bad example of a culture of non-payment.
“When homeowners use all their disposable income to service bond repayments, they need help to keep up with their rates and taxes.
He said Salga noted “with deep concern” that interest rates remain unchanged.
“This follows successive rate hikes. Interest rate increases negatively impact municipalities and their ability to provide services to communities and pay their suppliers,” he said.
“The timing of interest rate hikes could not have been worse for municipalities because it is compounded by a grave need to borrow money to cover the shortfall of nonpayment by government,”
He said low levels of business confidence were also affecting municipalities because companies only invest or expand in a highly confident environment.
“Municipalities can only finance new water pipelines or electricity transformers when businesses grow,” Ntuli said.
He said municipalities do not operate “in a vacuum or sanitised” environment.
“Municipalities are where all the stresses of our democracy are felt. The national climate and the prevailing political environment impact municipalities directly and profoundly in every municipal infrastructure in a community and a particular ward.”
He said interest rate hikes have negatively affected municipal finances, with increased debt service costs for municipalities, which diverts funds from essential services and infrastructure development.
“This reduced the borrowing capacity of municipalities, making it more challenging for them to fund infrastructure projects and service delivery. Higher interest rates have reduced consumer spending, negatively impacting local businesses and the overall
economy, further straining municipal finances in the year under review.”
Ntuli said the country’s high crime rates also affected municipalities by way of asset loss or damage.
According to police crime statistics, South Africa continued to have one of the highest crime rates in the world, with more than 2.1 million crimes reported in the 2023-24 financial year.
Ntuli said protests and social unrest have also greatly hampered service delivery. There were more than 10,000 protests reported in 2020 alone according to police data.
“The rising unemployment rate is a ticking time bomb for the national government, but it is a bomb that goes off every day in municipalities. Mayors are inundated with social and political problems directly linked to unemployment. An unemployment rate of 34.5% is one of the highest in the world and is wreaking havoc in municipal governance,” Ntuli said.
He added that 30.8% of the population lives below the poverty line.
“What is needed is economic growth that can absorb new entrants into the economy. Unfortunately, the average GDP growth rate of 1.4% from 2010 to 2023 has been below the African average.”
Ntuli said funding support is needed for municipalities under section 154 or section 139 interventions. But, he said, this legislative tool of intervention was “primarily a political intervention”.
“It is also, unfortunately, a method for cadre deployment for administrators with political interests while not being subjected to meaningful performance management of government administrators, which means that government support and intervention are only rhetorical. None of the municipalities under section 139 intervention showed meaningful improvement in their audit status outcomes.”
He said the department of cooperative governance and traditional affairs is spending almost R1 billion to pay the salaries of administrators.
“One administrator is earning R100 000, and that administrator is not even qualified, and some municipalities have been under administration for seven years,” he said.
Ntuli urged municipalities to support the Electoral Commission of South Africa during elections by offering essential resources such as secure storage facilities, escort vehicles and infrastructure support. He said political parties’ recent relaunch of the Provincial Multi-Party-Political Intervention Committee and the Signing of the Provincial Code of Conduct underscored the importance of collaboration to support tolerance and understanding.
“Regrettably, the province finds itself in mourning, grappling with a stark reality: 53.8% of councillor deaths are attributed to political assassinations, 7.7% to car accidents and 43.6% to natural causes. This data underscores a profoundly troubling trend — assassination has emerged as the predominant cause of death in the region,” Ntuli said.
“This sobering statistic demands immediate attention and concerted efforts to address the underlying issues fuelling such violence. This statistic is not merely a number; it symbolises the erosion of our democratic values and the violation of our forefathers’ bravely defended principles. In the heart of our province, let peace be our guiding principle.”