eThekwini Mayor calls for action amid R47 billion municipal debt crisis

Busi Mavuso, head of Business Leadership South Africa (BLSA), stated that the deterioration of municipal governance has become one of the most serious threats to South Africa's economic growth. She noted that companies are forced to compensate for state shortcomings, which entails significant costs.

The Significance of the 2026 Local Elections

Speaking as part of PSG's Think Big series on Tuesday, Busi Mavuso emphasized that the upcoming local elections in 2026 hold significance beyond mere political confrontation. In her view, they will determine whether municipalities can once again become drivers of economic development and attract necessary investment. Mavuso expressed concern over the state of many municipalities, which she said are seriously degrading and failing to perform the basic functions for which they were created.

Financial Burden on Business

From a business perspective, the situation is particularly alarming because even major metropolises are showing failures, placing an enormous burden on enterprises forced to independently manage the consequences of government failures. Companies are spending billions of rand on backup power, water storage, private security, road repairs, and alternative logistics just to continue their operations. Mavuso pointed out that the cost of doing business has become one of the main obstacles to economic activity.

Impact on Investment Climate

Despite the difficulty in quantifying the total economic damage from municipal dysfunction, Mavuso reported that the low quality of service delivery is increasingly affecting multinational corporations' investment decisions. She cited examples of manufacturers in the Cape Town region (Nelson Mandela Bay) who have had to maintain public infrastructure themselves, including substations, roads, schools, and fix water leaks. For instance, Volkswagen uses four substations, and if they fail, the responsibility for their maintenance lies with VW.

Risks for Global Capital

According to Mavuso, South Africa is weakening its position in attracting global investment because international companies compare opportunities across different countries. She stressed that capital is not guided by sentiment; investors allocate funds based on levels of risk, stability, predictability, and potential return. If infrastructure deteriorates and municipalities fail, investors will redirect capital to other regions.

The Johannesburg Problem

Mavuso described the decline of Johannesburg as a matter of national economic importance, not just a local issue. She noted that Johannesburg generates about 16% of South Africa's gross domestic product and hosts approximately 70% of the country's headquarters. Therefore, the city's efficiency is critical for the national economy. Mavuso stated that the decline of Johannesburg cannot be ignored, as it is unacceptable from a business standpoint.

Calls for Partnership and Reforms

Despite existing difficulties, Mavuso confirmed business readiness to continue cooperating with the government to improve municipal operations, similar to what was done to stabilize Eskom and improve Transnet's operations. BLSA contributed 20 million rand to the municipal reform program Operation Vulindlela, but she insists that meaningful partnership requires commitment from political leadership. BLSA is ready to apply this partnership model to the city of Johannesburg, provided there is a counterpart in the city seriously committed to fixing the situation.

Financial Inefficiency

Among the welcomed reforms are proposals to allocate municipal utility revenues to dedicated funds, professionalize municipal administrations, and grant the National Treasury the right to intervene earlier when signs of failure appear. Mavuso criticized the current management of municipal finances, citing National Treasury data which shows that the city of Johannesburg collected 11.9 billion rand in water supply revenue while spending only 1.3 billion rand on water-related infrastructure. She noted that the funds exist, but they are not being spent on maintaining the infrastructure for which they were collected.

National Consequences of Failures

Mavuso also argued that the overall program of economic reforms in South Africa must continue uninterrupted if the country aims to attract investment and create jobs. She warned that recent signs of slowing project implementation in Eskom and Transnet are already beginning to undermine investor confidence. Ahead of the local elections, she urged voters and political parties to realize that local government efficiency has national consequences. In her words, if cities cannot provide reliable electricity, water, roads, safety, and basic governance, they weaken South Africa's growth trajectory.

Residents and civil society members of the eThekwini municipality have expressed outrage over the municipality's ongoing financially inefficient management following the publication of a recent audit report. The audit revealed alarming instances of irregular spending and service delivery failures.

State Audit Findings

According to the Consolidated General Report on Local State Audit Outcomes for 2024/2025, presented by Chief Auditor Tsakani Maluleke, only 39 out of 257 municipalities nationwide passed a clean audit. This report demonstrated deeply entrenched poor governance and systemic failures.

The report showed that despite managing a budget expenditure of R71.02 billion—which accounts for 57% of the KwaZulu-Natal municipal budget—the eThekwini municipality has been unable to achieve a clean audit for over ten years. Furthermore, irregular expenditures sharply increased from R3.41 billion in 2020/2021 to R7.80 billion in 2024/25, with eThekwini contributing R4.48 billion, which is 57% of this total.

Infrastructure and Service Issues

The report also indicated that 98% of the R7.5 billion main infrastructure grant received in 2024/25 was utilized. This grant was intended for infrastructure development and maintenance. Severely damaged roads, poor drainage systems, and sewage leaks were noted in eThekwini and Msunduzi (Pietermaritzburg), indicating inadequate planned maintenance and delays in defect response.

Moreover, in eThekwini and the city of uMhlathuze (Richards Bay), wastewater treatment plants continued to discharge non-compliant effluent, and this issue remained unresolved. The municipalities of eThekwini, Msunduzi, and Indumbi (Dandy) also failed to ensure compliance at landfill sites, combat illegal dumping, and manage environmental risks.

Project Implementation Failures

Weaknesses in project management further hindered service delivery to residents. For instance, the Etafuleni residential project in eThekwini was supposed to be completed in 2014 but remained significantly delayed after 12 years. The report noted that some beneficiaries live in unfinished houses without basic services. This occurred due to poor planning and weak coordination of essential service connections, leading to illegal electricity connections and insufficient water access, posing health and safety risks.

Public Organization Response

Abdul Walodia, chairman of the Overport Ratepayers Association, stated that the report paints a worrying picture of the eThekwini municipality's persistent inability to achieve a clean audit over the last decade. He called it unacceptable for a metropolis of such size and strategic importance. According to him, these failures directly affect the daily lives of eThekwini residents, as ratepayers in areas like Overport continue to pay high taxes but face potholes, frequent sewer blockages, unreliable water supply, and growing protests over service provision.

Walodia emphasized that the most vulnerable populations suffer the most. He urged the municipality to take the findings as a 'wake-up call,' demanding immediate and decisive action, such as strengthening financial controls and eradicating irregular, fruitless, and wasteful expenditure through transparent procurement processes and applying accountability measures to officials who fail to comply with regulations. He demanded that the mayor, city manager, and council present a credible recovery plan with clear timelines and measurable goals within the next quarter.

Rachel Naidu, secretary of the Tongaat Public Association, stated that irregular and wasteful expenditure is unacceptable. She insisted that the municipality must move beyond merely identifying and writing off irregular expenses to ensuring strict enforcement of accountability measures. Naidu called on the city to conduct a thorough review of supply chain processes, as recurring irregular spending related to expired contracts and non-compliance points to a systemic failure in internal controls that must be corrected at the administrative level.

Paul Govender, chairman of the Shalcross Public and Ratepayers Association, noted that while the report caused deep concern, it was not a surprise. He observed that communities have lived with the consequences of municipal failures for years. Govender stated that the municipality must move beyond crisis management and implement a comprehensive strategy for infrastructure renewal, preventive maintenance instead of reactive repairs, competent project management, and transparent procurement.

Yogesh Naidu, chairman of the Reservoir Hills Ratepayers Association, pointed to chronic weaknesses in financial management, including poor budgeting practices, weak revenue and cash flow management, as well as massive water and electricity losses. He noted that for the communities, this translates to unnoticed pipe bursts, deteriorating road conditions, sewer leaks, and housing project delays spanning more than a decade.

Political parties have expressed serious concern over the current administrative failures in eThekwini, highlighting the negative impact of these problems on residents and calling for urgent reforms to restore public trust.

Criticism of Governance and Finances

Tabani Ndlovu, the DA party's finance representative in eThekwini, stated that the party is deeply concerned by the audit results, which once again demonstrated weak governance and inefficient financial administration within the municipality. He noted that many findings from the Auditor-General have been raised repeatedly over several years, yet no significant improvement has been achieved.

Ndlovu pointed to the current administration's failure to implement corrective measures and hold officials accountable. He emphasized that a culture of impunity has allowed poor management practices to persist, undermining public trust and weakening the municipality's ability to provide essential services.

Consequences for Residents

According to Ndlovu, ongoing issues include awarding contracts to contractors with a history of failing to meet municipal agreements and persistent instances of irregular spending. These shortcomings directly affect service quality, forcing residents to endure deteriorating infrastructure, unreliable basic services, and project delays.

He called on municipal leadership to immediately implement the Auditor-General's recommendations and strengthen the accountability system. In his view, only decisive action can restore trust and set the municipality on a path toward sustainable and effective service delivery.

Views of Political Figures

Nathaniel Patchapen, a member of the ADeC council in eThekwini, agreed that the report confirms long-standing resident problems. He noted that despite receiving a qualified audit opinion with reservations, persistent irregular spending, infrastructure issues, and weak financial control point to serious management difficulties.

Patchapen stated that honest taxpayers are the biggest losers, as they continue to pay higher tariffs while facing worsening roads, water outages, sewage spills, power supply failures, and declining service quality. He insisted that residents should not have to bear extra costs to cover inefficiency and poor financial management.

Jonathan Annipen, an IFP MP in Phoenix, reported that for many residents, the report's findings merely confirm their daily experience. He listed problems such as increasing water interruptions, further road deterioration, unresolved sewage overflow issues, inconsistent waste collection, and reactive rather than preventive infrastructure repair.

Annipen warned that this negatively affects business, reduces investment confidence, and exacerbates unemployment when basic municipal services cannot be relied upon. He called for urgent intervention to strengthen financial control, eliminate irregular spending, modernize revenue collection systems, and ensure grants are used for their intended purpose.

Alice Govender, an ActionSA MP in eThekwini, stated that she speaks on behalf of thousands of taxpayers who feel anger, fatigue, and disrespect. She believes that despite timely tax payments, residents receive potholes, water cuts, and excuses. Govender demanded that the municipality fix meters, recover debts, and hold those responsible for wasteful spending accountable, otherwise, the 'qualified with reservations' status will signify the municipality's failure to the people.