With a financial stability score of 60% and 59% respectively, the Western Cape and KwaZulu-Natal are the most financially stable provinces in the country, rating agency Ratings Afrika’s latest Municipal Financial Stability Index has found.
All seven other provinces, including Gauteng, scored lower than 50% with the North West and Free State provinces scoring the lowest at 26% and 25% respectively – a strong indication that political leadership is failing.
“The political leaders of the municipalities in South Africa, whose responsibility it is to govern, have failed in the majority of municipalities as reflected by their weak financial sustainability. The same thread is visible in many state-owned entities such as Eskom, the Post Office, SABC etc, where financial weakness is largely caused by weak financial governance on behalf of the political leaders and management in charge of these entities,” Ratings Afrika said.
The Northern Cape scored 49%, followed by Limpopo (43%), the Eastern Cape (41%), Gauteng (30%) and Mpumalanga with a score of 30%, while the average score for the country overall was 43%.
“The sad reality is that this week financial governance is also prevalent in Central Government, which is now threatened with sovereign rating downgrades by the world’s leading rating agencies,” the agency said.
At the metropolitan level, despite being the most well-off metros in the country, the City of Johannesburg and the City of Tshwane find themselves on the worst financial footing and in “deep financial trouble”, with scores of 37% and 24% respectively.
“This reflects severe deficiencies in their budgeting practices and financial discipline,” said Ratings Afrika.
“The current political leadership in control of the majority of municipalities has demonstrated over the last five years, and more, to not being capable of sound governance. This is the main cause of their low financial sustainability.”
SA Metro scores
- Cape Town (75%, up from 61% in 2014)
- Buffalo City (73%, down from 78% in 2014)
- Ekurhuleni (70%, up from 67% in 2014)
- Nelson Mandela Bay (58%, down from 59% in 2014)
- eThekwini (50%, down from 52% in 2014)
- Mangaung (38%, down from 62% in 2014)
- Johannesburg (37%, down from 49% in 2014)
- Tshwane (24%, down from 26% in 2014)