Restoring federalism: A path to transformative governance in South Africa - Ayanda Zulu

Key topics:SA’s Constitution promises federalism, but centralisation still dominates.Devolution of power, resources urged to improve local governance.A Federalisation Act could protect local autonomy and boost accountability..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Ayanda Sakhile Zulu*.At least on paper, when the 1996 Constitution was adopted, South Africa formally became a federal state. Power was no longer supposed to flow only from the top down. Provinces and municipalities were granted original constitutional authority, and the principle of cooperative government was introduced to enable a decentralised and responsive system. But in practice, the country has remained functionally unitary, with a central government that hoards both power and revenue. Federalism has never been given meaningful legislative or fiscal expression.This betrayal of the Constitution’s federal character is not merely a technical issue, but also a crisis of governance. When one centre controls virtually everything, from policing and prosecutions to procurement and public service rules, the costs of failure are nationalised. In a country as diverse and unequal as ours, over-centralisation has led to a dangerous concentration of risk, inefficiency, and public distrust. The path forward is not to invent new systems from scratch, but to implement what already exists in our highest law and to do so with urgency and resolve.The Free Market Foundation has, through its Liberty First initiative, argued that federalism is not merely a structural preference, but also a vital check on centralised power (www.LibertyFirst.co.za). Principles such as devolution, fiscal decentralisation, and subsidiarity are not mere administrative conveniences; they are also constitutional requirements. If federalisation were implemented properly, it would restore balance between spheres of government, promote local accountability, and offer South Africans real choice in how they are governed. Without this balance, the promise of democratic participation remains hollow.Parliament should begin by passing a Devolution Act, or a set of coordinated devolution laws, that assign legislative and executive powers from the central government to provinces and municipalities. The Constitution already provides for such transfers in numerous places such as section 44(1)(a)(iii), for example, which allows Parliament to assign “any matter” to other spheres. But without enabling legislation, these provisions lie dormant and their potential unrealised.Key areas where national authority could and should be devolved include: the regulation of collective bargaining, preferential procurement frameworks, the establishment of police services, and much of the oversight functions of institutions like the Auditor-General and Public Protector. Furthermore, any function listed in Schedules 4 and 5 of the Constitution — including health, education, housing, and local economic development — is a prime candidate for devolution. These are not fringe matters, but core responsibilities that directly impact the lives of citizens on a daily basis.While the devolution of powers is essential, it is meaningless without the resources to back it up. .Read more:.Restoring federalism: A path to transformative governance in South Africa - Ayanda Zulu.The country’s fiscal system is entirely upside down. Provinces and municipalities are expected to carry out wide-ranging responsibilities while the central government controls nearly all revenue. Provinces are left with trivial taxation powers, while municipalities rely heavily on grants. This discourages initiative, rewards underperformance, and entrenches dependency on the centre. It undermines any serious effort at local innovation or problem-solving.The FMF recommends not only greater transfers, but a rebalancing of fiscal authority itself. Provinces and municipalities should have an overriding entitlement to the majority of revenue generated within their jurisdictions. This would trigger healthy interjurisdictional competition in the sense that better-managed regions would attract high net-worth taxpaying businesses and residents, while misgoverned ones would face pressure to reform. The decentralisation of the South African Revenue Service and the National Treasury could support this, through a representative revenue board and treasury board composed of stakeholders from each sphere, with voting power tied to local revenue generation.Without a shift in political thinking, the changes to laws and fiscal systems will be ineffective. Federalisation requires more than just laws and revenue sharing. It also demands a fundamental shift in how governance is approached. Parliament needs to move away from the centralist mindset that has dominated since the transition to democracy. One key step would be the introduction of a Federalisation Act, which could codify important principles like subsidiarity, thus ensuring that governance happens at the most local level possible. It would also safeguard devolved powers from arbitrary revocation, except in exceptional circumstances. Additionally, the Act would set clear limits on national intervention under sections 100 and 139 of the Constitution, and prevent their political abuse. As it stands, these provisions have sometimes been used to centralise control, and they consequently undermine local autonomy and erode public trust in democratic processes. These proposed changes are not radical. Rather, they are a return to what our Constitution already prescribes. What is truly radical is the current state of affairs, where a bloated central government controls everything while local areas wither without the important check that responsibility entails. Federalisation offers a path to restore constitutional fidelity, promote competition, and diffuse power away from Pretoria. The country's diversity is not a weakness. It is, in actuality, a strength waiting to be unlocked through a truly federal order. It is time to implement the federal promise of 1996, not merely in form, but also in substance..*Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.

Restoring federalism: A path to transformative governance in South Africa - Ayanda Zulu

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