South Africa’s National Treasury released a report on local government finances, revealing that municipalities spent nearly half (46.3%) of their total budget by the end of December 2023. However, revenue collection fell short, with municipalities only collecting 50.3% of their budgeted income.
This mismatch between spending and revenue collection raises concerns about the financial health of municipalities. The report highlights several key points:
- Slump in capital expenditure: While operational expenses are nearing halfway spent, capital expenditure for infrastructure projects is lagging at just 31.1%.
- Household debt is the biggest burden: The largest portion of municipal debt comes from households, accounting for 72.7% of the total.
- Low collection rates: Municipalities are struggling to collect revenue, achieving only 58.4% of their targeted collection rate of 75.6%. This shortfall could lead to cash flow problems.
- Slow spending on infrastructure grants: Infrastructure grant programs are seeing slow spending, raising concerns that unspent funds might be returned to the national government, harming communities that rely on those projects.
The National Treasury report emphasizes the importance of accurate financial reporting and data collection. They are working to improve the credibility of the data submitted by municipalities.
