South African municipalities owe creditors R161 billion, while their underlying financial weaknesses persist regardless of which political parties voters elect to govern them.
Prof. Joseph Sekhampu, chief director of the NWU Business School, has warned that the country has created a local government system where some municipalities have become “too failed to fail”, with their debts and damaged infrastructure surviving electoral cycles.
By December 2025, municipalities reported owing creditors about R161 billion, while Eskom separately reported municipal arrears of R110.5 billion. A large proportion of municipalities had adopted unfunded budgets during the 2024/25 financial year.
Debt relief programme struggles
National Treasury’s debt relief programme highlights the challenge. Its 71 participating municipalities owed Eskom R85 billion by December, yet only 15 had consistently met the programme’s conditions.
The government is now implementing arrangements under which financially distressed municipalities can delegate electricity distribution and revenue collection to Eskom, shifting responsibilities they can no longer adequately fulfil.
Historical debts remain unresolved
Nelson Mandela Bay’s Municipal Public Accounts Committee has recommended writing off roughly R23 billion in historical irregular expenditure accumulated between 2009 and 2021.
Moqhaka in the Free State owes Eskom about R2.45 billion while participating in the debt relief programme and struggling with an unfunded budget.
Municipal distress changes the incentives of creditor and debtor alike, allowing local financial weakness to migrate through state machinery, Sekhampu said.
Enforcement creates service delivery risks
National Treasury temporarily withheld equitable share transfers from municipalities in July following persistent breaches of financial management rules. Parliament warned that withholding the funds could jeopardise basic services, particularly for indigent households.
By the end of the month, remaining allocations to some municipalities had been released following further engagement and compliance processes.
Long-term recovery plans fail
Makana in the Eastern Cape had a financial recovery plan in place by 2015. Five years later, the Eastern Cape High Court directed the province to implement the plan and dissolve the council. In June 2026, the South African Human Rights Commission was still finding constitutional violations arising from persistent water and sanitation failures.
Ditsobotla in North West has endured eight unsuccessful interventions, the dissolution and re-election of its council, and eventually the escalation of responsibility from provincial to national government under section 139(7) of the Constitution.
The history matters as South Africa approaches the November local government elections. Councillors and governing parties can be replaced while debts, damaged infrastructure and weak revenue systems pass into the next term.
Sekhampu warned that if enough municipalities reach the edge together, their accumulated failures will eventually test the capacity of the institutions standing behind them to absorb the fall.
“South Africa has spent years pulling municipalities back from the cliff. The deeper vulnerability emerges when the ground behind the rescuers starts moving too,” he said.
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