Parliament, Wednesday, 25 February 2026 – The Select Committee on Cooperative Governance and Public Administration today welcomed the Review of the Local Government Funding Model that is underway, but emphasised that structural reforms are needed, not only financial adjustments to local government allocations.
The committee received a briefing from the Department of Cooperative Governance and Traditional Affairs (COGTA) with input from the South African Local Government Association (SALGA), on two key developments aimed at addressing challenges in local government: the Review of the 1998 White Paper on Local Government and the Review of the Local Government Funding Model.
Committee members were informed that the final White Paper is expected to be submitted to the Minister and Cabinet in March this year. The committee was also informed that the current 9.9 per cent share of nationally raised revenue allocated to local government is insufficient to meet constitutional and service delivery obligations. However, committee members were told that efficiency and revenue reforms alone cannot resolve the funding gap, and that infrastructure underinvestment presents a growing long-term risk. It was therefore recommended that the National Treasury consider revising the allocation from 9.9 per cent to 17.8 per cent, commission a national affordability analysis and examine reforms to strengthen fiscal sustainability.
The Chairperson of the committee, Mr Mxolisi Kaunda, emphasised that the crisis in local government is both structural and systemic and requires comprehensive reform beyond just funding adjustments. Mr Kaunda said that one of the key issues is municipalities’ ability to attract and retain skilled employees. He noted that many smaller municipalities struggle to attract and afford the skills and expertise they need. “Many municipalities often operate without technical directors, engineers and the professional capacity required to deliver directly to communities, while administrative units remain fully staffed and critical technical posts vacant. As a result, service delivery is compromised.”
The Chairperson also raised concerns about the categorisation and grading of municipalities, particularly where significantly different salary structures apply. This creates distortions and encourages skills migration. He stressed that these are all issues that must be carefully examined as part of the review.
Another concern was rural development. Mr Kaunda said that unless conditions in rural areas are fundamentally changed, local government will continue to struggle. “What is our comprehensive rural development strategy? Is it limited to agriculture or ad hoc initiatives, or does it include integrated settlement planning, infrastructure provision and economic development?”
The committee highlighted the role of traditional leadership and noted that, in many areas under traditional leadership, land allocation is carried out without integrated spatial planning. As a result, settlements are developed without provision for clinics, schools or other public facilities. This leads to fragmented and unsustainable development. The Chairperson said that government should deliberately allocate funding to support municipalities and traditional leaders to align land-use management, spatial planning and development objectives to achieve integrated human settlements.
The Chairperson also cautioned against simplistic solutions and called for greater creativity. “Rather than choosing only between full insourcing or traditional outsourcing to private companies, we should explore transformative alternatives such as social enterprises or cooperatives,” he said. “Communities can be organised into social enterprises that provide services such as waste collection or security. These enterprises can be trained in business management, invoice municipalities directly and distribute income among members. This broadens ownership, reduces exploitation and allows communities to participate meaningfully in their own development.”
The committee also challenged long-standing assumptions about municipal revenue capacity. “There has long been an assumption that municipalities that do their work properly will be in a better position to raise revenue. However, the bigger challenge has been the continued migration of economically active populations to the metros,” said the Chairperson. He noted that metropolitan areas are projected to grow from approximately 15 per cent to 25 per cent of the population and warned that underfunded and structurally weak local government would continue to produce predictable outcomes.
While the committee welcomed proposals to increase national transfers to local government, the Chairperson urged caution. “We do not want to meet again in five years and conclude that the new percentage is still insufficient. What is the overall intervention that will ensure sustainability?” he asked.
Mr Kaunda also criticised bureaucratic inefficiencies that undermine public–private collaboration. He provided an example where a R1.7 million donation to rehabilitate a police station took more than three years to approve. “This is unacceptable. We call for private sector support, yet we delay it through bureaucratic inefficiencies. If we are serious about partnerships, we must fix these systemic weaknesses.”
The committee noted that funding increases alone would not resolve the crisis. Structural reform, rural development, procurement reform, community participation and innovative service delivery models must all form part of a comprehensive response. “We must explore all possible interventions to make local government work effectively,” the Chairperson said.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND PUBLIC ADMINISTRATION, MR MXOLISI KAUNDA.
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E-mail: aoctober@parliament.gov.za
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