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
      Musk's war on OpenAI ends in crushing defeat - Elon Musk Sam Altman

      Elon Musk’s war on OpenAI ends in crushing defeat

      18 May 2026

      Activists challenge 160MW Cape Town data centre project

      18 May 2026
      GoTyme braces for customer churn as it forces app migration - Cheslyn Jacobs

      GoTyme braces for customer churn as it forces app migration

      18 May 2026
      TCS | Charge's R1.8-billion bet on an off-grid EV future - Charge chairman Joubert Roux

      TCS | Charge’s R1.8-billion bet on an off-grid EV future

      18 May 2026
      WeBuyCars to sell its AI inspection platform to rivals - Faan van der Walt

      WeBuyCars to sell its AI inspection platform to rivals

      18 May 2026
    • World
      The walkout that could hit every laptop and AI server - Samsung

      The walkout that could hit every laptop and AI server

      18 May 2026
      Pop star sues Samsung for $15-million - Dua Lipa

      Pop star sues Samsung for $15-million

      11 May 2026
      OpenAI's new audio APIs aim for conversational voice agents

      OpenAI’s new audio APIs aim for conversational voice agents

      8 May 2026
      'It was my idea': Musk claims paternity of OpenAI - Elon Musk

      ‘It was my idea’: Musk claims paternity of OpenAI

      29 April 2026
      Pivotal week for US tech stocks

      Pivotal week for US tech stocks

      28 April 2026
    • In-depth
      Alfa's electric rebel - Alfa Romeo Junior Elettrica Veloce

      Alfa’s electric rebel

      29 April 2026
      Africa switches on as Europe dims the lights

      Africa switches on as Europe dims the lights

      9 April 2026
      The biggest untapped EV market on Earth is hiding in plain sight

      The biggest untapped EV market on Earth is hiding in plain sight

      1 April 2026
      Datatec is firing on all cylinders - Jens Montanana

      The R16-billion tech giant hiding in plain sight

      26 March 2026
      The last generation of coders

      The last generation of coders

      18 February 2026
    • TCS
      TCS+ | The Up&Up Group on the hidden cost of AI - Jason Harrison

      TCS+ | The Up&Up Group on the hidden cost of AI

      13 May 2026
      Michael Rossouw

      TCS+ | The retirement decision most South Africans get wrong

      6 May 2026
      TCS | The Cape Town start-up listening for TB with AI - Braden van Breda

      TCS | The Cape Town start-up listening for TB with AI

      4 May 2026

      TCS+ | ‘The ISP for ISPs’: Vox’s shift to wholesale aggregator

      20 April 2026
      TCS | Werner Lindemann on how AI is rewriting the infosec rulebook

      TCS | Werner Lindemann on how AI is rewriting the infosec rulebook

      15 April 2026
    • Opinion
      Free calls, dead voice and Shameel Joosub's Spanish ghost - Duncan McLeod

      Free calls, dead voice and Shameel Joosub’s Spanish ghost

      22 April 2026
      The conflict of interest at the heart of PayShap's slow adoption - Cheslyn Jacobs

      The conflict of interest at the heart of PayShap’s slow adoption

      26 March 2026
      South Africa's energy future hinges on getting wheeling right - Aishah Gire

      South Africa’s energy future hinges on getting wheeling right

      10 March 2026
      Free calls, dead voice and Shameel Joosub's Spanish ghost - Duncan McLeod

      Apple just dropped a bomb on the Windows world

      5 March 2026
      R230-million in the bag for Endeavor's third Harvest Fund - Alison Collier

      VC’s centre of gravity is shifting – and South Africa is in the frame

      3 March 2026
    • Company Hubs
      • 1Stream
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • Ascent Technology
      • AvertITD
      • BBD
      • Braintree
      • CallMiner
      • CambriLearn
      • CM Telecom
      • Contactable
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • HOSTAFRICA
      • Incredible Business
      • iONLINE
      • IQbusiness
      • Iris Network Systems
      • Kaspersky
      • LSD Open
      • Mitel
      • NEC XON
      • Netstar
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Telviva
      • 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
      • HealthTech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Policy and regulation
      • 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

    Follow TechCentral on Google News Add TechCentral as your preferred source on Google


    Eskom top
    WhatsApp YouTube
    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

    South Africa marks a full year without load shedding

    South Africa marks a full year without load shedding

    15 May 2026
    Eskom battles widespread outages as storm batters the Cape

    Eskom battles widespread outages as storm batters the Cape

    11 May 2026
    SA stretches fuel tax relief as oil prices surge

    SA stretches fuel tax relief as oil prices surge

    29 April 2026
    Company News
    Why the security operations centre is now a boardroom issue - Chris Norton Kaspersky

    Why the security operations centre is now a boardroom issue

    18 May 2026
    Netstar brings coding and robotics to inner-city Joburg - Collin Govender, Altron Group chief operating officer; Leona Pienaar, MES CEO; Marisa Jansen van Vuuren, Altron Group chief marketing officer; Innocent Mabusela, Jozi My Jozi CEO; and Warren Mande, incoming Netstar MD

    Netstar brings coding and robotics to inner-city Joburg

    18 May 2026
    7 key digital platforms to market your business online - Domains.co.za

    7 key digital platforms to market your business online

    14 May 2026
    Opinion
    Free calls, dead voice and Shameel Joosub's Spanish ghost - Duncan McLeod

    Free calls, dead voice and Shameel Joosub’s Spanish ghost

    22 April 2026
    The conflict of interest at the heart of PayShap's slow adoption - Cheslyn Jacobs

    The conflict of interest at the heart of PayShap’s slow adoption

    26 March 2026
    South Africa's energy future hinges on getting wheeling right - Aishah Gire

    South Africa’s energy future hinges on getting wheeling right

    10 March 2026

    Subscribe to Updates

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

    Latest Posts
    Musk's war on OpenAI ends in crushing defeat - Elon Musk Sam Altman

    Elon Musk’s war on OpenAI ends in crushing defeat

    18 May 2026

    Activists challenge 160MW Cape Town data centre project

    18 May 2026
    GoTyme braces for customer churn as it forces app migration - Cheslyn Jacobs

    GoTyme braces for customer churn as it forces app migration

    18 May 2026
    TCS | Charge's R1.8-billion bet on an off-grid EV future - Charge chairman Joubert Roux

    TCS | Charge’s R1.8-billion bet on an off-grid EV future

    18 May 2026
    © 2009 - 2026 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}