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The South African Local Government Association (SALGA) Gauteng notes with appreciation the recent briefing by the Gauteng MEC for Finance and Economic Development, Hon. Lebogang Maile, on the consolidated state of municipal finances for the period ending 31 December 2025, including revenue performance, capital spending, and the rising municipal debt burden.

While progress is acknowledged, serious concern remains over continued underspending on municipal capital budgets, particularly where expenditure falls below the accepted benchmark of 95 percent. This underperformance delays infrastructure delivery and directly affects the provision of basic services to communities.

“Municipalities must strengthen supply chain planning, conclude procurement processes earlier in the financial year, and improve contract management,” urges SALGA Gauteng Chairperson Jongizizwe Dlabathi. “Preventing project delays, cost overruns, and the rolling over of funds is essential to improving service delivery.”

SALGA concurs with the MEC that transparent reporting on municipal financial performance is fundamental for strengthening accountability, promoting good governance, and ensuring communities understand how public funds are managed. Municipalities must continue striving to meet revenue targets, improve capital project implementation, and maintain financial sustainability to support quality service delivery to residents and businesses.

The briefing highlights wider structural and systemic challenges facing municipalities:

Chronic Underfunding and Revenue Challenges

Municipalities deliver nearly half of all public services but receive a disproportionately small share of funding relative to their service delivery responsibilities .

This long-standing imbalance undermines municipalities’ ability to sustainably finance basic services, address infrastructure backlogs, and meet constitutional obligations.

SALGA continues to call for a comprehensive overhaul of the local government funding model to ensure adequate, predictable, and equitable funding for municipalities of all sizes.

Municipal Debt and Intergovernmental Coordination

SALGA recognises the concern regarding rising municipal debt, including arrears owed by, government departments, businesses and households. Weak revenue collection systems, high consumer debt, ineffective credit control, and inadequate enforcement mechanisms contribute significantly to deteriorating municipal cash flows.

“As the voice of local government, we call on government departments, businesses and communities to meet their obligations by paying for municipal services, including rates and taxes. Consistent payment is central to restoring municipal financial stability and safeguarding service delivery,” says Dlabathi.

SALGA has consistently advocated for stronger intergovernmental coordination, clear consequence management, and collaborative interventions to address debt owed by state entities to municipalities. Ensuring the long-term sustainability of municipalities requires coordinated policy responses, improved funding frameworks, and shared accountability across the intergovernmental system.

The association remains committed to working with municipalities, communities, and government partners to strengthen financial management, improve service delivery, and restore confidence in the local government sector.

Issued by South African Local Government Association