JOHANNESBURG, Gauteng — The South African Federation of Trade Unions (SAFTU) has warned that the National Treasury’s decision to withhold July equitable share transfers to nearly 70 municipalities could severely harm poor communities. While the labor federation supports stricter financial accountability in local government, SAFTU General Secretary Zwelinzima Vavi stresses that measures to enforce fiscal discipline must not compromise basic service delivery for the country’s most vulnerable residents.
The National Treasury recently moved to halt grant payments to over 60 municipalities in an effort to enforce the Public Finance Management Act and curb systemic financial mismanagement. According to repeated reports by the Auditor-General, a majority of local governments are currently dysfunctional, exhibiting defiance through unauthorized, irregular, fruitless, and wasteful expenditure.
The Scale of Municipal Debt and Mismanagement
Vavi acknowledged that from a labor perspective, representing both employed and unemployed workers, it is necessary to support the Treasury’s push for accountability. Public finances, funded by everyday taxpayers through VAT and other levies, must be jealously guarded. However, he urged President Cyril Ramaphosa and relevant cabinet ministers to move beyond “beautiful words” and take concrete action against failing municipalities.
The financial figures underpinning the Treasury’s decision paint a grim picture of local governance. According to SAFTU, the scale of the crisis is highlighted by several staggering statistics:
- Wasteful Expenditure: Municipalities have accumulated approximately R40.14 billion in unauthorized, irregular, fruitless, and wasteful spending.
- Total Creditor Debt: Local governments currently owe creditors a combined R160 billion.
- Eskom Arrears: A massive R87.9 billion of that debt is owed to the power utility Eskom, threatening its own survival.
- Water Board Arrears: An additional R27.3 billion is owed to various water boards.
A Crisis of Skills and Political Interference
Addressing the root causes of this financial wastage, Vavi pointed to a severe lack of competent personnel and a profound political management crisis at the local government level. He criticized the deliberate deployment of individuals lacking the requisite skills to critical financial and managerial positions.
In some cases, Vavi noted, major municipalities have operated for years without essential staff, such as municipal engineers. He suggested that in certain instances, skilled professionals are intentionally bypassed to manipulate systems for the advantage of “tenderpreneurs.” He emphasized the urgent need for political parties to prioritize candidates who possess the basic ability to read and comprehend complex financial statements ahead of future local elections.
The Domino Effect on Basic Services
The withholding of funds and the broader municipal liquidity crisis have a direct, devastating impact on everyday service delivery. Vavi highlighted the situation involving Pikitup, the waste management entity in the City of Johannesburg. Due to severe financial constraints and policy failures, municipalities are frequently forced to divert funds—such as pulling money meant for waste collection to pay off Eskom or water boards. The direct result for residents is uncollected refuse bins and deteriorating public health conditions.
Rejecting Austerity for a Redistribution Strategy
Beyond the lack of skills and corruption, Vavi argued that the government’s current economic trajectory of austerity and budget cuts is fundamentally flawed, particularly for rural and deeply impoverished areas.
Vavi explained that the vast majority of residents simply cannot afford municipal rates, water, or electricity. In communities where only a tiny fraction of the population—such as teachers, nurses, and police officers—are formally employed, standard indigent policies fall short. With roughly 13 million South Africans currently unemployed, Vavi argued that reducing transfers to local governments with no tax base will only deepen the triple crisis of unemployment, poverty, and inequality.
“We cannot afford the path of austerity,” Vavi stated, calling for a fundamental shift in the government’s economic program.
To prevent marginalized communities from being condemned to collapsing municipalities and perpetual poverty, SAFTU is demanding the implementation of a wealth tax and a solidarity tax. Vavi argued that 32 years into democracy, South Africa desperately needs a true redistribution strategy that shifts resources from the rich to the poor, ensuring that vulnerable communities finally experience functional local governments capable of cleaning streets, removing health hazards, and delivering basic human necessities.
