Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News
      Digital authoritarianism grows as African states normalise internet blackouts

      Digital authoritarianism grows as African states normalise internet blackouts

      19 December 2025
      Starlink satellite anomaly creates debris in rare orbital mishap

      Starlink satellite anomaly creates debris in rare orbital mishap

      19 December 2025
      TechCentral's South African Newsmakers of 2025

      TechCentral’s South African Newsmakers of 2025

      18 December 2025
      Malatsi buries Post Office's long-dead monopoly

      Malatsi buries Post Office monopoly the market ignored

      18 December 2025
      China races to crack EUV as chip war with the West intensifies

      China races to crack EUV lithography as chip war with the West intensifies

      18 December 2025
    • World
      Trump space order puts the moon back at centre of US, China rivalry - US President Donald Trump

      Trump space order puts the moon back at centre of US, China rivalry

      19 December 2025
      Warner Bros slams the door on Paramount

      Warner Bros slams the door on Paramount

      17 December 2025
      X moves to block bid to revive Twitter brand

      X moves to block bid to revive Twitter brand

      17 December 2025
      Oracle’s AI ambitions face scrutiny on earnings miss

      Oracle’s AI ambitions face scrutiny on earnings miss

      11 December 2025
      China will get Nvidia H200 chips - but not without paying Washington first

      China will get Nvidia H200 chips – but not without paying Washington first

      9 December 2025
    • In-depth
      Black Friday goes digital in South Africa as online spending surges to record high

      Black Friday goes digital in South Africa as online spending surges to record high

      4 December 2025
      Canal+ plays hardball - and DStv viewers feel the pain

      Canal+ plays hardball – and DStv viewers feel the pain

      3 December 2025
      Jensen Huang Nvidia

      So, will China really win the AI race?

      14 November 2025
      Valve's Linux console takes aim at Microsoft's gaming empire

      Valve’s Linux console takes aim at Microsoft’s gaming empire

      13 November 2025
      iOCO's extraordinary comeback plan - Rhys Summerton

      iOCO’s extraordinary comeback plan

      28 October 2025
    • TCS
      TCS+ | Africa's digital transformation - unlocking AI through cloud and culture - Cliff de Wit Accelera Digital Group

      TCS+ | Cloud without culture won’t deliver AI: Accelera’s Cliff de Wit

      12 December 2025
      TCS+ | How Cloud on Demand helps partners thrive in the AWS ecosystem - Odwa Ndyaluvane and Xenia Rhode

      TCS+ | How Cloud On Demand helps partners thrive in the AWS ecosystem

      4 December 2025
      TCS | MTN Group CEO Ralph Mupita on competition, AI and the future of mobile

      TCS | Ralph Mupita on competition, AI and the future of mobile

      28 November 2025
      TCS | Dominic Cull on fixing South Africa's ICT policy bottlenecks

      TCS | Dominic Cull on fixing South Africa’s ICT policy bottlenecks

      21 November 2025
      TCS | BMW CEO Peter van Binsbergen on the future of South Africa's automotive industry

      TCS | BMW CEO Peter van Binsbergen on the future of South Africa’s automotive industry

      6 November 2025
    • Opinion
      Netflix, Warner Bros deal raises fresh headaches for MultiChoice - Duncan McLeod

      Netflix, Warner Bros deal raises fresh headaches for MultiChoice

      5 December 2025
      BIN scans, DDoS and the next cybercrime wave hitting South Africa's banks - Entersekt Gerhard Oosthuizen

      BIN scans, DDoS and the next cybercrime wave hitting South Africa’s banks

      3 December 2025
      Your data, your hardware: the DIY AI revolution is coming - Duncan McLeod

      Your data, your hardware: the DIY AI revolution is coming

      20 November 2025
      Zero Carbon Charge founder Joubert Roux

      The energy revolution South Africa can’t afford to miss

      20 November 2025
      It's time for a new approach to government IT spend in South Africa - Richard Firth

      It’s time for a new approach to government IT spend in South Africa

      19 November 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • IQbusiness
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Netstar
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Vodacom Business
      • Wipro
      • Workday
      • XLink
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Financial services
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Satellite communications
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » In-depth » Failing cities stymie South Africa’s bid to revive growth

    Failing cities stymie South Africa’s bid to revive growth

    By Agency Staff14 November 2019
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    South African municipalities’ inability to provide consistent power is exacerbating supply disruptions by the debt-stricken state electricity utility, hobbling efforts to revive the nation’s economy.

    While state-owned Eskom has subjected the country to controlled, timed blackouts intermittently over the past decade to prevent a total collapse of the country’s power grid, municipalities cut supply more regularly and often without notice — hurting sales, production, business confidence, jobs and economic growth.

    Local governments — which buy electricity from Eskom and sell it at a higher price to their customers — heavily rely on sales of power to fund their maintenance budgets. With companies seeking more regular supply, many are defecting from municipal systems or producing electricity privately using generators or solar panels. This results in even less revenue for municipalities to repair dilapidated roads, leaking water pipes and broken pavements, and replace stolen communication and power cables.

    We’ve got billions of rand of maintenance backlogs across local government – the downtown areas of small towns are literally falling apart

    “We’ve got billions of rand of maintenance backlogs across local government — the downtown areas of small towns are literally falling apart,” said Tracy Ledger, the head of research at the Public Affairs Research Institute in Johannesburg. “A lot of unscheduled power cuts take place because the infrastructure isn’t being maintained.”

    The country has made strides in extending services to many communities excluded during white-minority rule, but municipalities have faced more than 1 400 protests against poor delivery since 2012. Only 18 of the country’s 257 audited local governments got clean outcomes in 2018 and 128 were in financial distress in 2017, according to national treasury.

    One of the big casualties of the lack of consistent power is manufacturing, whose contribution to GDP has declined by a third in the past 25 years. This adds to the drag on an economy that’s heading for nine years of sub-2% growth.

    Dysfunctional

    “One of the most adverse factors for economic growth in this country, is dysfunctional municipalities,” Reserve Bank deputy governor Rashad Cassim said last month.

    Since 2009, investment in the metals and engineering sector has dropped 36%, in part because of a sixfold increase in electricity costs and erratic power supply that renders the industry unattractive to investors, according to Michael Ade, the chief economist at the Steel and Engineering Industries Federation of South Africa.

    Seifsa has 1 300 member companies — down from a peak of about 2 000 — that employ close to 200 000 workers, and most of the firms are concentrated in the provincial economic hub of Gauteng.

    Ekurhuleni, in the east of Gauteng, is home to the country’s biggest international airport. It once represented the largest single territorial concentration of manufacturing in the nation and was known as Africa’s workshop, according to the Centre for Development and Enterprise. Manufacturing’s share of the area’s gross value added has fell to 23% in 2015 from 30% in 2000, it said in its development plan.

    “A lot of businesses have moved away or closed,” said Carol Ova, an executive member of the Ekurhuleni Aerotropolis Chamber of Commerce and Industry. “The power cuts, cable theft and lack of maintenance of water infrastructure all have a negative impact on production and communication. The municipality doesn’t advise when the cuts will happen. And while people try to make do with generators, this isn’t an option for many businesses because of the prohibitive cost.”

    The municipality didn’t response to e-mailed questions. It has developed a plan to revitalise the manufacturing sector, saying it has facilitated R7-billion of foreign direct investment each year since mid-2013.

    Problems in revenue management are the largest contributor to financial distress in local government

    Macsteel Service Centres is one of the biggest rate payers in Ekurhuleni, with 12 sites across the area. “The amount of disruption… we’re just living with it — it’s part and parcel of living in South Africa,” said Mike Benfield, its CEO. Six years ago, the company had almost double the 3 000 workers it employs now and produced as much as 25% more.

    Financial support isn’t the issue. After state staff costs, goods, debt-service expenses and household grants, municipalities are the largest recipients of government transfers.

    “Problems in revenue management are the largest contributor to financial distress in local government,” the Treasury said. In 2017/2018, almost half of all municipalities collected less than 80% of their billed revenue, it said.

    ‘Huge challenge’

    South Africa’s fiscal framework for municipalities — set up in the 1998 white paper on local government — assumed they will be able to fund maintenance out of their own revenue, Ledger said. “This is a huge challenge in smaller municipalities, given that many people can’t pay their accounts and so their own revenue is under enormous pressure,” she said.

    Local government receives support for new infrastructure development through conditional capital grants, such as municipal infrastructure grants, but can’t use this money for upkeep of what’s already there, said Ledger. The treasury is looking to reform the system, allowing for grants to be used to renew infrastructure.

    When nationwide power outages started in 2008, Macsteel invested in generators. “Diesel usage can amount to a few million rand annually,” Benfield said. “New entrants wouldn’t survive. Many major industrial concerns are looking at ways to bypass Eskom and the municipalities. Business is working on alternative power sources all the time. The problem is it takes five to 10 years to pay.”  — Reported by Ana Monteiro, (c) 2019 Bloomberg LP



    Eskom top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleIconic Motorola Razr is back, now as a foldable smartphone
    Next Article Is Telkom on a fool’s errand with Cell C?

    Related Posts

    Ramokgopa bullish on energy outlook as new projects get green light - Kgosientsho Ramokgopa

    Ramokgopa bullish on energy outlook as new projects get green light

    15 December 2025
    Eskom unveils four-subsidiary structure for future South African grid

    Eskom unveils four-subsidiary structure for future South African grid

    10 December 2025
    Nersa plan ushers in major shift in South Africa's electricity market

    Nersa plan ushers in major shift in South Africa’s electricity market

    8 December 2025
    Company News
    Why TechCentral is the most powerful platform for reaching IT decision makers

    Why TechCentral is the most powerful platform for reaching IT decision makers

    17 December 2025
    Business trends to watch in 2026 - Domains.co.za

    Business trends to watch in 2026

    17 December 2025
    MTN Zambia launches world's first 4G cloud smartphone solution - Huawei

    MTN Zambia launches world’s first 4G cloud smartphone solution

    17 December 2025
    Opinion
    Netflix, Warner Bros deal raises fresh headaches for MultiChoice - Duncan McLeod

    Netflix, Warner Bros deal raises fresh headaches for MultiChoice

    5 December 2025
    BIN scans, DDoS and the next cybercrime wave hitting South Africa's banks - Entersekt Gerhard Oosthuizen

    BIN scans, DDoS and the next cybercrime wave hitting South Africa’s banks

    3 December 2025
    Your data, your hardware: the DIY AI revolution is coming - Duncan McLeod

    Your data, your hardware: the DIY AI revolution is coming

    20 November 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Latest Posts
    Digital authoritarianism grows as African states normalise internet blackouts

    Digital authoritarianism grows as African states normalise internet blackouts

    19 December 2025
    Starlink satellite anomaly creates debris in rare orbital mishap

    Starlink satellite anomaly creates debris in rare orbital mishap

    19 December 2025
    Trump space order puts the moon back at centre of US, China rivalry - US President Donald Trump

    Trump space order puts the moon back at centre of US, China rivalry

    19 December 2025
    TechCentral's South African Newsmakers of 2025

    TechCentral’s South African Newsmakers of 2025

    18 December 2025
    © 2009 - 2025 NewsCentral Media
    • Cookie policy (ZA)
    • TechCentral – privacy and Popia

    Type above and press Enter to search. Press Esc to cancel.

    Manage consent

    TechCentral uses cookies to enhance its offerings. Consenting to these technologies allows us to serve you better. Not consenting or withdrawing consent may adversely affect certain features and functions of the website.

    Functional Always active
    The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
    Preferences
    The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
    Statistics
    The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
    Marketing
    The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
    • Manage options
    • Manage services
    • Manage {vendor_count} vendors
    • Read more about these purposes
    View preferences
    • {title}
    • {title}
    • {title}