Johannesburg inner city. Picture: 123RF/Mirko Vitali
Johannesburg inner city. Picture: 123RF/Mirko Vitali

The total funding gap in the country’s biggest municipalities, including its eight metros, is expected to reach R569bn over 10 years, a report has found

The state of city finances report, released by the SA Cities Network in Johannesburg on Monday, made it clear that the metros would not be able to meet their core mandates over the medium to long term if that funding gap is not bridged.

The funding gap the report referred to is the difference between available revenue and capital finance, and the operating and capital expenditure required for municipalities to adequately deliver on their mandates.

The report estimated that a funding gap of R18bn in 2017 is projected to grow to R83bn by 2026. This would translate to a total gap of R569bn over 10 years.

The report said cities could and should take steps to close the gap, but that they needed policy support at national level to develop and implement alternative revenue models.

The analysis used in the report said the funding gap was likely to grow over the next 10 years, and that closing it would require multiple interventions.

One of the interventions listed, which was within the control of metros, was to improve expenditure, improve fiscal effort and extract revenue from city services and assets.

Another intervention, which would necessitate national government’s action as well, was to reduce the mandates of metros. 

“Metros can choose to focus on their core service delivery mandates, but a full review of their powers and functions requires action by national government,” the report said.

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