PRETORIA, Gauteng — The National Treasury municipal funding freeze has sparked urgent concern from the South African Federation of Trade Unions (SAFTU), with leadership warning that withholding July equitable share transfers to nearly 70 municipalities will severely harm poor communities. SAFTU General Secretary Zwelinzima Vavi stressed that while the federation supports rigorous financial accountability in local government, these austerity measures must not compromise essential service delivery for the country’s most vulnerable residents.
The National Treasury’s move to halt grant payments to over 60 municipalities aims to enforce the Public Finance Management Act (PFMA) and curb systemic financial mismanagement. Repeated reports from the Auditor-General have painted a grim picture of local governance, highlighting widespread dysfunction, unauthorized spending, and a blatant defiance of financial regulations.
Balancing Accountability with Basic Service Delivery
Addressing the crisis, Vavi clarified that from a labor perspective—representing both employed and unemployed workers—SAFTU fundamentally supports the Treasury’s push for accountability. He noted that public finances belong to the everyday citizens who fund them through VAT and other taxes, meaning these resources must be jealously guarded.
However, Vavi urged President Cyril Ramaphosa and relevant cabinet ministers to move beyond rhetoric and take concrete, actionable steps to hold failing municipalities accountable without punishing the poor.
Unpacking the R160 Billion Municipal Debt Crisis
The financial data driving the Treasury’s intervention highlights a staggering scale of mismanagement. According to Vavi, municipalities have accumulated approximately R40.14 billion in unauthorized, irregular, and wasteful expenditure.
Beyond internal wastage, the broader liquidity crisis is threatening national infrastructure. The union highlighted that local governments currently owe creditors a combined R160 billion. This massive debt burden includes:
- R87.9 billion owed directly to the power utility Eskom, a deficit that threatens the utility’s own survival.
- R27.3 billion owed to various regional water boards.
A Profound Skills Deficit and Political Mismanagement
When analyzing the root causes of this financial wastage, Vavi pointed to a severe lack of competent personnel and a deep political management crisis within local government. He referenced a poignant observation by the late Minister of Cooperative Government and Traditional Affairs, who jokingly but painfully noted that many municipal councillors lacked the basic ability to read financial statements—sometimes literally holding their pages upside down.
With local government elections approaching on November 4, Vavi emphasized a critical need for political parties to prioritize candidates who possess the fundamental ability to comprehend municipal finances.
Furthermore, he criticized the deliberate deployment of individuals lacking requisite skills into critical financial and managerial roles. Vavi noted that some major municipalities have operated for years without employing a single engineer. He also pointed to instances where municipalities, such as Cape Town, boast about recruiting top-tier engineers produced through political structures like the ANC’s Khanya project, only to leave those skills unutilized. In many cases, Vavi argued, skilled professionals are intentionally bypassed to manipulate systems for the benefit of “tenderpreneurs.”
The Domino Effect on Service Delivery
This financial mismanagement creates a zero-sum game for basic services. Vavi illustrated this using Pikitup, the waste management entity in the City of Johannesburg. Due to severe municipal financial constraints, funds are routinely diverted in a desperate bid to pay critical creditors.
“Municipalities will rob the water board in order to pay Eskom, or they will rob Pikitup in order to pay another entity,” Vavi explained. The direct consequence for ordinary residents is that waste bins go uncollected, leading to deteriorating public health and living conditions.
Rejecting Austerity: The Call for Wealth and Solidarity Taxes
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 entirely short. With roughly 13 million South Africans currently unemployed nationally, Vavi argued that reducing transfers to local governments with no tax base will only deepen the triple crisis of unemployment, poverty, and inequality.
To prevent marginalized communities from being condemned to collapsing municipalities and perpetual poverty, SAFTU is demanding a radical shift in the government’s economic program. Vavi called for the implementation of a wealth tax and a solidarity tax, arguing that South Africa desperately needs a true redistribution strategy that shifts resources from the rich to the poor.
“We are now 32 years into democracy,” Vavi concluded, noting that the poorest citizens have yet to experience a functional municipality capable of cleaning streets, removing health hazards, and delivering basic human necessities. He insisted that current economic policies must be fundamentally altered to ensure the poor are not left behind in the ongoing transformation of the country.