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- The five most financially stable municipalities in the country are based in the Western Cape, according to Ratings Afrika, a municipal financial sustainability index.
- Cape Town was found to be the most financially stable metro out of the eight in the country.
- The Naledi Local Municipality in North West was found to be the worst-performing municipality in South Africa.
Five of the most financially stable municipalities in South Africa are in the Western Cape, and Cape Town is the metro that's leading the pack.
This is according to municipal financial sustainability index, Ratings Afrika, which tracked the financial performance of 104 of the largest municipalities and all eight metros for the year ending in June 2022.
The Western Cape municipalities of George, Mossel Bay, Cape Town, Saldanha and Swartland scored the highest.
The index uses a scoring metric that gauges a municipality's performance.
The measure includes six financial components: operating performance, liquidity management, debt governance, budget practices, affordability, and infrastructure development. It scores these components out of 100.
This is how they fared:
- George scored 71;
- Saldanha Bay scored 72;
- Mossel Bay scored 70;
- Swartland scored 70; and
- Cape Town (metro) scored 68.
The index's compilers said tracking of the municipalities over five years showed they could balance their revenue collection, pay their debt, deliver services, and invest in infrastructure, while maintaining sound financial records.
"They normally have well-entrenched financial policies, and their budgets are based on sound long-term financial strategies. They adhere to good budgetary practices, strict financial control and good revenue collection, even through tough economic conditions," said researcher Leon Claassen.
"The sound levels of financial sustainability place these municipalities in a very strong position to invest in infrastructure, and it gives them the capacity to absorb financial shocks."
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Cape Town was the only one of the country's eight metros that was found to be financially stable.
"Cape Town is the only metro still considered financially sustainable in 2022 with a score of 68, outperforming the rest of the metros by a large margin.
Claassen said:
Outside of the Western Cape, a success story in Gauteng was the Midvaal Local Municipality.
The worst-performing metros were Tshwane in Gauteng and Mangaung in the Free State.
"Mangaung and Tshwane are of grave concern. They realise operating deficits of R1.9 billion and R4.2 billion respectively, and their liquidity shortfalls are R1 billion and R6.9 billion respectively," Claassen said.
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The lowest-scoring municipality was Naledi in the North West, with 7.
In line with problems flagged by the Auditor-General in the past, among the worst-performing municipalities were: Enoch Mgijima in the Eastern Cape; Rand West in Gauteng; Newcastle in KwaZulu-Natal; and Beaufort West in the Western Cape. All of them scored below 20 out of 100.
These struggling municipalities had the same failing dynamics: large operating deficits, liquidity shortfalls, unfunded operating and capital budgets, and low levels of infrastructure development.
Claassen said an analysis had shown that "the destruction of the municipalities in the rest of the country continues unabated with extremely weak governance by elected councillors".
