Companies are closing shop and abandoning entire towns in South Africa

The Congress of South African Trade Unions (Cosatu) has warned of dire consequences if the country fails to fix its local government structures and municipalities.

In a presentation on the Division of Revenue Bill to parliament this week, the country’s largest trade federation slammed the government for being silent on these failures and the impact on the local job market.

“The most alarming part of the Division of Revenue Bill is that it is absolutely silent on the chaos and rampant financial mismanagement, collapse in good governance, and ballooning corruption that has come to characterise the public’s experiences with local government,” it said.

“In 2013, 86 out of the 259 municipalities were in financial problems. In 2019, it had risen to 175. In 2022, according to the Auditor-General, it has risen to 90%. Yet the Bill and Budget are silent on what is the government’s plan to fix this crisis.”

Cosatu warned there are ‘real consequences’ to the government’s failure to fix local government.

“Municipal workers are being sent home unpaid. Roads, water, sanitation, and electricity are deteriorating at an alarming pace. Companies are closing, retrenching, and abandoning entire rural towns.

“Yet it seems our politicians have no idea on what needs to be done. Less than a year after the 2021 local elections, Mangaung Municipality is on the verge of being put under administration.”

Unable to create jobs

The Department of Planning, Monitoring and Evaluation (DPME) has also flagged the deteriorating state of South Africa’s municipalities, including poor delivery of basic services and crumbling infrastructure at a local level, as key hurdles to job creation efforts.

It cited the recent water crisis in the Lekwa Municipality in Mpumalanga which affected poultry farming and increased production costs for the region’s biggest job creator Astral Foods.

It added that poor administration and crumbling infrastructure also led to Clover closing the country’s largest cheese factory in Lichtenburg in the North West.

South Africa’s unemployment rate reached a record high of 34,9% in Q3 2021, with 7.6 million people looking for work.

The high unemployment rate among the youth remains a major concern in South Africa as youth continue to account for the largest proportion of unemployed people.

Youth aged 15-24 years and 25-34 years recorded the highest unemployment rates of 66.5% and 43.8% respectively in Q3 2021. About 3.4 million (33,5%) out of 10.2 million young people aged 15-24 years were not in employment, education or training (NEET).


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