The country’s 257 municipalities want their share of the billions of rand allocated from the national fiscus to be more than doubled, and the SA Revenue Service (SARS) to help them collect their unpaid bills.

SA Local Government Association (SALGA) President Bheke Stofile wants municipalities’ share of national government revenue to increase from the current 9%.

In his Budget speech earlier this year, Finance Minister Enoch Godongwana indicated that the division of nationally raised revenue of R2.4 trillion of total non-interest spending would be allocated to provinces over the medium term, while municipalities would receive R552.7 billion over the same period.

Addressing the three-day Urban 20 Mayoral Summit in Sandton, Johannesburg, Stofile backed the review of the white paper on local government, first adopted in 1998, as the funding model for local government was no longer fit for purpose.

“Today, we contend with a South Africa that allocates a mere 9% of national revenue to municipalities, whereas the global average hovers around 20%. Even this percentage (20%) is insufficient,” he said.

Stofile is the speaker of the troubled Matjhabeng Local Municipality, which was placed under administration by the Free State provincial government earlier this year.

“Given the extensive responsibility assigned to local government, how can municipalities charged with the delivery of water, electricity, sanitation, housing and roads be expected to operate on a mere 9%?” he asked.

Stofile said the answer was very clear and that is why South Africans have decided to enter into a journey of reviewing the white paper.

“If municipalities are underfunded, the nation limps. It is important, therefore, to deal with these matters robustly; the review of the white paper must not only devise a new funding formula for South Africa but also garner global recognition that local governments require a larger share of national revenue to thrive,” he explained.

Stofile added that strengthening municipalities is necessitated by more than government allocations but demands partnerships.

“Financial institutions, insurers, and revenue authorities must emerge as allies of local government. Banks can facilitate new capital through municipal bonds, an innovative financial instrument, and insurers can safeguard budgets against the shocks of climate-related disasters, ensuring that floods, droughts, and fires do not obliterate years of local advancement.” 

According to Stofile, revenue services such as SARS must collaborate with municipalities to expand the tax base, enforce compliance, and combat the culture of non-payment that undermines sustainability in local government.

He said while municipalities may be the legs of a nation, institutions such as banks, insurers, and revenue authorities are the muscles that provide strength, balance, and resilience.

loyiso.sidimba@inl.co.za

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