21 April 2025

Moving from Oversight to Intervention to fix the local government

We debate the 2026 Division of Revenue Bill in a time when the world is confronted with economic volatility due to the aggression of the USA and Israel against Iran. The blockade of the Strait of Hormuz has reminded us again that we are part of a globally interconnected economy. The assumptions that informed the 2026 fiscal framework have changed, and the National Treasury will be required to make various adjustments in the Medium-Term Budget Policy Statement in October. We welcome the fuel levy reduction by the Minister as a measure to lessen the impact of the fuel increase.

One of the major shifts in the orientation of the National Treasury is moving from oversight to intervention. The ANC welcomes this orientation as our constitution requires cooperative governance that ensures the three spheres of government are collectively responsible for the realisation of the Bill of Rights.

Interventions by the presidency to resolve Load Shedding and the establishment of the eThekwini Task Team and the Johannesburg Task Team are some of the key flagship interventions which have improved living conditions in eThekwini, and Load Shedding is a thing of the Past. In Mpumalanga, SANRAL was involved in road infrastructure projects supporting municipalities, and a number of municipal routes are being supported by SANRAL. With regards to water infrastructure, the National Department is currently supporting a number of municipalities beyond the provision of bulk water infrastructure to ensure reticulation is developed and water reaches households. A major aspect that should be developed is ensuring that interventions lead to improved capabilities within local municipalities.

With 63 per cent (162) of municipalities in financial distress in 2023/24, and provinces struggling to balance compensation costs and service-delivery outputs, this approach has reached its limit.

The Division of Revenue introduces measures that seek to enhance policy implementation at a local government level through clauses that allow the National Treasury to reallocate funds in non-performing local municipalities to its District Municipalities that have the capacity to spend the funds to serve the constituency allocated such budgets. Furthermore, the DORA includes a clause to allow for the conversion of Schedule 5 to Schedule 6 allocations for non-performing local municipalities to enable national implementation either directly or via another organ of state, including SOEs. These provisions in the DORA bring about a new approach that demands performance from municipalities, and failure of implementation should lead to the state utilising some of its critical entities to execute the projects, because communities lose the most due to municipalities in distress. These are the tangible measures to fix local government and to improve service delivery, thereby leaving no one behind.

The Division of Revenue is allocated considering various factors and further aims to close the inequalities across different municipalities due to their capacity. This is evident with the higher per capita allocation for municipalities in rural areas and those with revenue limitations.

The vertical division of revenue allocates 48.2 per cent to the national government, 42.3 per cent to the provincial government, and 9.5 per cent to local government. The provincial equitable share is largely allocated to provide critical social services that support economic development and growth while ensuring the well-being of all South Africans. The provincial equitable share allocates 48 per cent for education based on school-age population and learner enrolment in public ordinary schools and 27 per cent for health based on provincial risk profiles and caseloads.

It is for this reason that the ANC Manifesto’s priority of focusing on Early Childhood Development is prioritised in the Medium Term with the Early Childhood Development Grant (ECDG) Investment having an increase by 115.8 per cent. This is a lifetime investment the government is making to create equal opportunities for all our children, regardless of their background. The massive access and support for learners, such as the school nutrition programme and scholar transport, are there to support the success of our children. An area we need to increase our focus and have allocations to support is programmes that prepare our children for the digital economy and the changing world. Our education should produce innovators and place the country at the cutting edge of global innovation and production of new technologies. Indeed, the ANC has truly embedded a fiscal framework that places education as priority number one, and the results are evident for all to see. Today, having a degree, a master’s or a doctorate is no longer a privilege of the few and those who can afford. Through NSFAS and the National Research Foundation, we provide a pipeline for children to succeed to the highest levels of education. As Public Representatives, we should focus on cultivating a culture that prioritises education in our constituencies and ensure we encourage our children and youth to succeed.

The allocation for local municipalities largely supports infrastructure programmes for Municipal disaster recovery, Urban settlements development, Public transport network, Regional bulk infrastructure, amongst other Direct conditional grants at the tune of R57 billion. This is a direct supplement of locally generated revenue and the equitable share, increasing overall support for municipalities. The ANC is confident that through the White Paper review, a reimagined system will be implemented to improve local government funding and functioning. The white paper’s proposals include a more differentiated system in which functions are assigned according to demonstrated capacity.

As part of the stimulus to respond to the coronavirus pandemic impact, the President introduced a Presidential Employment Stimulus as a mechanism to tackle the high levels of unemployment and to give the youth and the unemployed opportunities to acquire skills while providing support to government programmes, acquiring real-life work experiences which open doors for other work opportunities. The DORA allocates 1.2 billion for the Presidential Employment Stimulus, continuing with the critical work of job creation. The creation of jobs requires the participation of all organs of state and the private sector to increase investments in programmes and projects that create decent job opportunities.

The ANC support the Division of Revenue Bill as an instrument to support government policy implementation to improve the living conditions of all South Africans, particularly the poor and marginalised.