The BER found that municipalities continue to generate about 75% of their operating revenue from their own tax bases, but are increasingly unable to collect the money they bill residents and businesses.
South Africa's struggling municipalities are being held back by weak governance and poor financial management rather than a lack of funding, according to a new report by the Bureau for Economics (BER), which argues that meaningful municipal reform is essential to unlocking faster economic growth.
The report comes two weeks after Finance Minister Enoch Godongwana withheld national government transfers to 69 municipalities over governance and financial management failures, signalling a tougher approach by National Treasury.
Authored by BER economist Rose Murunzi and senior economist Roy Havemann, with technical assistance from economic writer Claire Bisseker, the report says municipalities, particularly metropolitan areas, are central to South Africa's economic performance.
“Metros (city regions) remain the most important from a population and growth perspective. Therefore, as large metros continue to struggle, this starts to weigh on overall economic growth,” the report stated.
