South Africa debt crisis threatens municipal solvency

Significance

Until recently, worsening indicators were confined to small-town and rural areas, but now, as the report highlights, the problem has spread to major metropolitan local government areas (‘metros’), which house 40% of the population and concentrate 60% of GDP.

Impacts

• The proposed diversification of electricity supply may further complicate municipal revenue streams.
• The current crisis will strain constitutionally mandated relations between central, provincial and local governments.
• The opposition DA is unlikely to capitalise on the ruling ANC’s governance failures, particularly in rural areas.