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South Africa’s chronic power cuts and dry water taps highlight a mounting municipal debt crisis that threatens state utility Eskom and strains public finances.
Analysts expect Wednesday’s local elections to produce more hung councils, creating political instability that could stall critical financial solutions.
Eskom reports that municipalities owe the utility 122.5 billion rand, while households and businesses owe municipalities 484.5 billion rand ($29.2 billion).
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According to National Treasury budget data, local governments collect only 63.9 per cent of those debts, leaving them unable to pay key suppliers like Eskom and regional water boards.
Eskom confirmed to Reuters that municipal debts “weigh heavily on the national budget, the sovereign credit rating and borrowing costs.”
The financial strain across the public sector has prompted intervention from Finance Minister Enoch Godongwana, who froze funding to non-compliant municipalities in July and established a strict reform roadmap with deadlines extending to November 30.
Wednesday’s municipal elections threaten to complicate recovery efforts further, as projections show no single party winning an outright majority in major metropolitan regions.
Oxford Economics Africa senior political analyst Louw Nel predicted that the number of hung councils could rise from 70 in 2021 to around 100 following this vote.
While Eskom noted that a municipality’s financial obligations “remain unchanged even in the event of a new administration taking over office,” the utility acknowledged that leadership turnover “brings with it uncertainty” right as councils face strict Treasury compliance deadlines.
