South Africa heading for disaster

Experts have warned that South Africa is heading for disaster with collapsing water, electricity, and road infrastructure, and financial mismanagement at municipalities.

The Auditor-General’s latest report on the state of South Africa’s municipalities showed that most municipalities face severe liquidity and cash flow problems.

Auditor-General Tsakani Maluleke said that while there are some green shoots, municipalities have made limited progress in improving audit outcomes.

“Over the past four years, mayors and councils have made limited progress to strengthen governance and improve service delivery,” she said.

“Residents and businesses continue to experience unreliable service delivery, environmental hazards and deteriorating infrastructure.”

A particularly concerning statistic was that 51% of municipalities in South Africa face severe liquidity and cash flow problems.

The Auditor-General’s report showed they had an adverse current ratio, meaning they did not have enough current assets to cover their current liabilities.

174 municipalities had an adverse liquidity ratio, meaning they did not have enough cash available to pay their creditors

This resulted in service providers routinely being left unpaid or paid late, with devastating knock-on effects on local economies.

These findings align with research from the School of Accounting, Economics, and Finance at the University of KwaZulu-Natal.

The researchers said that persistent fiscal stress in South African municipalities undermines service delivery, harming residents’ quality of life.

Professor Betty Mubangizi from the University of KwaZulu-Natal said these problems manifest in localised unrest and service-delivery protests.

She said these protests are symptoms of deep institutional decay, systemic corruption, and failures of accountability within local councils.

“Structural problems, such as corruption, institutional dysfunction and governance breakdowns, drive many protests attributed to service delivery failures,” she said.

Water problems across South Africa

One of South Africa’s biggest challenges is water, with many analysts and researchers warning that South Africa is on the verge of a system-wide water collapse.

Institutional neglect and organised crime are diverting funds from maintenance to water tankers linked to mafia groups.

A good example is the Setsoto municipality in the Free State, which spent R14 million on water tankers, more than three times what it spent on infrastructure repairs.

In the 2024 financial year, the Setsoto municipality spent approximately R4.6 million on water tankers, which increased to R14 million the following year.

This is not unique. Many municipalities across South Africa are spending millions on water tankers rather than on maintaining water infrastructure.

Dr Tumiso Mokhomole from the Forensic Investigations Directorate at the Department of Agriculture, Land Reform, and Rural Development, shed light on the problem.

He explained that water mafias deliberately sabotage municipal infrastructure to force local governments into lucrative emergency water-tanker contracts.

“Water tanker madias damage water infrastructure to derail the main supply while contracted by municipalities on an emergency basis to render water,” he said.

“This makes it difficult for law enforcement to investigate and make arrests due to the operational complexity of the criminal syndicates.”

He said that if law enforcement and state authorities do not intervene, the situation will reach a point where it becomes unmanageable or uncontrollable.

Electricity problems in municipalities across South Africa

Numerous municipalities across South Africa fail to pay Eskom, creating a systemic crisis which threatens the electricity supply to towns and cities.

As of 2026, the outstanding municipal debt to Eskom has increased to R112 billion, which the power utility warned is unsustainable.

South Africa’s richest city, Johannesburg, is among the biggest debtors, with R6 billion in outstanding debt to the electricity utility.

Eskom chairman Mteto Nyati said that although they have not yet instituted rolling blackouts in the City of Johannesburg, the current situation is unacceptable.

“Eskom will reduce, interrupt, or terminate electricity supply to key Johannesburg bulk points as City Power and CoJ arrears hit R5.2 billion. Enough is enough,” he said.

Nyati questioned how South Africa, as a society, allows a major metro like Johannesburg to operate with such disregard for accountability.

“It is a betrayal of the citizens we serve and the future we’re fighting to build. We must demand better. Integrity and responsibility cannot be optional in our cities,” he said.

Apart from not paying Eskom, many municipalities are failing to maintain their electricity infrastructure, leading to localised blackouts.

The problems include ageing assets, a lack of maintenance and funds for upgrades, vandalism, electricity theft, and overloading.

It has reached such a concerning level that municipal electricity infrastructure failures pose a risk to South Africa’s society and economy.

The Emfuleni Local Municipality is a good example. Infrastructure problems in the city have left a major industrial business park without electricity for 23 days.

The business park consists of engineering firms, factories, tyre retreaders, and other major employers, most of whom require a stable and consistent electricity supply.

The prolonged power outage is forcing one of the business owners to spend approximately R60,000 per day on diesel to keep the lights and machinery on.

South Africa’s finances are in a poor state

South Africa is facing severe financial challenges, including a rapidly growing public-sector wage bill, 27 million people on social grants, and high debt-servicing costs.

The government has run continuous budget deficits since 2008, which pushed the debt-to-GDP ratio to 79%. This, in turn, has resulted in South Africa’s debt service payments reaching R432.4 billion in the 2025/2026 fiscal year.

To put this in perspective, it is more than what the country spends on security, basic education, or healthcare. The government now spends R1.2 billion a day on interest.

Efficient Group chief economist Dawie Roodt said that the government has mismanaged its finances for years. It has now reached a point where there is no more room to protect the economy from external shocks.

This also means it is unable to spend money to boost the local economy, drive employment, and invest in infrastructure.

Roodt explained that, with debt-to-GDP above 77%, the government needs all the revenue it can get and cannot afford to reduce the fuel levy or similar interventions.

“There is no room for movement there, where we can use the state to buffer or to protect the South African economy from international developments,” Roodt said.

“I am afraid, though, that we have done so much damage to the South African economy that there just isn’t room really to support it from the state.”