Budget Speech 2025

The decline in municipal services is evident across cities, towns and rural villages highlighting the systemic challenges faced by this varying group of municipalities.

As outlined by the President in his State of the Nation Address, phase 2 of Operation Vulindlela, the institutional structure of local government will be reviewed through the updating of the white paper of local government.

In line with the constitutional principle of funds follow function, the review of the local government fiscal framework will examine how to appropriately finance local government, relative to their functions and their form.

Reforms to the revenue generating services of local government, namely water and sanitation, electricity and refuse removal are underway.

Six of the eight metropolitan municipalities have met the minimum requirements to participate in the financial performance incentive grant, the Urban Development Financing Grant.

Further allocations in the programme are dependent on municipalities meeting specific targets related set out in their performance improvement action plans.

For 2025/26, this includes critical institutional, governance and management changes to create an enabling environment for long term investment in infrastructure.

By ring-fencing the revenues from these services, and running operating surpluses, these business units can generate funds for infrastructure improvements to deliver quality and reliable services.