South Africa’s economic debate focused on the wrong place, says Deon Van Zyl, chair of the Western Cape Property Development Forum. Writing in an op-ed following the conclusion of the forum’s annual conference, which drew record-breaking attendance in Cape Town recently, Van Zyl argues that the conversation needs to shift.
“We speak endlessly about national policy, cabinet reshuffles, the GNU, fiscal reform and presidential initiatives. But we overlook the single institution that ultimately determines whether investment happens, jobs are created and infrastructure is delivered. South Africa does not have a national growth problem; it has a local government problem.”
This statement reflects an uncomfortable reality, Van Zyl says.
Van Zyl says every investment, whether a factory, shopping centre, housing estate, hospital, school or logistics hub, happens within a municipality. Every square metre of land falls within a municipal boundary, and every planning approval, engineering service, electricity connection, water supply and road ultimately depends on the effectiveness of local government. Before growth happens in South Africa, he said, it happens in a municipality.
SA’s economic future tied to municipalities
He refers to National Treasury’s recent decision to withhold R13.5 billion in equitable share allocations from 69 municipalities, saying it should be viewed as far more than a financial intervention.
“It is an acknowledgement that the country’s economic future cannot be separated from the health of its municipalities. More than one quarter of municipalities failed to meet acceptable financial standards. That is not merely an administrative failure; it represents a direct threat to investment confidence and economic growth.”
“When municipalities function well, they become platforms for investment. They shorten approval times, maintain infrastructure, expand bulk services and provide certainty to investors. When they fail, projects are delayed, costs escalate, businesses relocate and communities lose opportunities. Investors rarely distinguish between local government failure and South Africa as an investment destination; they simply experience risk,” he says.
Van Zyl said the Constitution recognised the strategic importance of municipalities by creating three spheres of government rather than a hierarchy. They were intended to be developmental institutions with meaningful responsibility for growing local economies.
Municipalities carry enormous delivery responsibilities while remaining heavily dependent on national transfers and increasingly constrained by central oversight.
“Yet over time, fiscal centralisation has weakened that vision. Municipalities carry enormous delivery responsibilities while remaining heavily dependent on national transfers and increasingly constrained by central oversight. We should stop treating municipalities merely as service providers. They are economic institutions. Their primary purpose should be to create the conditions in which private investment, entrepreneurship and infrastructure can flourish.”
This, he says, requires a different approach.
“We should rebuild technical excellence by restoring strong engineering capacity, empowering professional planners and expecting municipal Chief Financial Officers to become strategic asset managers rather than simply compliance officers. We should reward municipalities that grow their economies, expand their tax base and deliver infrastructure, instead of treating all municipalities alike irrespective of performance.”
Future not to be decided in Pretoria
Van Zyl says it is also time to rethink local democracy itself.
“For example, Council meetings could be held in the evenings, enabling experienced professionals and entrepreneurs who contribute daily to the economy through their own businesses, as well as retired executives, to serve their communities most effectively. Municipal government should attract the country’s best talent, not simply its most available talent.”
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The forthcoming local government elections, he argues, must therefore be about far more than political parties and personalities. They should be about reimagining the very institution on which South Africa’s future prosperity depends.
“If South Africa wants sustained economic growth, the answer will not be found only in Pretoria. It will be found in municipalities that approve developments, maintain infrastructure, manage assets professionally and enable local economies to thrive.
For three decades, South Africa has tried to grow the economy from the top down. Perhaps the next decade should be about growing it from the bottom up.
“The real reform agenda is therefore not simply fixing municipalities. It is recognising that municipalities are the engine room of the South African economy. Fix local government, and economic growth will follow.”
“For three decades, South Africa has tried to grow the economy from the top down. Perhaps the next decade should be about growing it from the bottom up. History suggests that nations seldom become prosperous because national governments become larger. They become prosperous because their cities and municipalities become stronger.
The future of South Africa will therefore not be decided first in the Union Buildings. It will be decided in municipal Council Chambers across the country,” he says. “And yes, it will be decided at the November local government ballot boxes across the country.”
