South Africa’s cities struggle as overspending hits services, Dep FinMin warns

Key topics:SA municipalities overspend on salaries, underinvest in infrastructureService failures spark protests in Johannesburg and other townsUrgent reforms needed, including accountable utilities and coalitions.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..By Mike Cohen.South Africa’s main municipalities, with the exception of Cape Town, are in a “death spiral,” spending way too much money on administrative staff and too little on maintaining and building infrastructure, a deputy finance minister warned. “Salary bills have grown much faster than inflation, faster than revenue and far faster than service outputs,” Ashor Sarupen told the Cape Town Press Club on Wednesday. “The result is a state that looks busy, that delivers less, consuming more in salaries and symbolism, while investing less in infrastructure that actually keeps our cities alive.”Management shortcomings are clearly evident in Johannesburg, South Africa’s economic hub, and many of the country’s 256 other municipalities. Residents have to contend with patchy refuse collection and regular water and electricity outages — problems that have triggered a number of violent protests. .Read more:.SA municipalities fail to deliver despite infrastructure funding surge.Turning the situation around will require urgent and coordinated interventions to ensure officials are held accountable and funding is earmarked for core services, according to Sarupen. The Treasury is trying to support the process by providing conditional grants to towns that ring-fence their utilities and their capital budgets, demonstrate that they are properly managed and charge market-related fees for their services.“If we can fix our metro utilities, we begin to fix our major towns, and with that, the conditions for economic growth,” the deputy minister said.Sarupen is a member of the Democratic Alliance, South Africa’s second-biggest political party and one of 10 that entered a coalition government after last year’s election failed to produce an outright winner. The alliance isn’t working optimally because the African National Congress, the biggest party, has resisted entering into a formal coalition agreement, and relations are guided by a broad statement of intent that isn’t always adhered to, Sarupen said. A so-called clearing house that is meant to resolve differences over policy also isn’t functioning properly and has hardly met this year, he added. A legal framework is needed to make coalition agreements “public, transparent and binding,” because there is currently no recourse when they are violated, he said. Sarupen announced that he intends standing for election as chairman of the DA’s federal council at a party conference next year, and will decide whether to step down as deputy finance minister if he wins. The post is currently held by Helen Zille, who is running to become mayor of Johannesburg in municipal elections that must be held by early 2027, with Sarupen serving as her deputy. .© 2025 Bloomberg L.P.

South Africa’s cities struggle as overspending hits services, Dep FinMin warns

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