South Africans are understandably tired of paying more and getting less. Every year, households and businesses see higher electricity and water bills, but service delivery worsens and infrastructure continues to collapse.
Wednesday’s national budget delivered by the finance minister made the root cause painfully clear: municipalities are unable to collect the revenue they need to function and the system as it stands is unsustainable.
Municipal debt to Eskom has exploded to more than R85bn and is expected to exceed R100bn this year. This is not due to insufficient transfers from nationally collected revenue. In fact, local government allocations keep rising.
The main problem is many municipalities don’t collect what is owed to them. Illegal connections bypassing meters go unaddressed, bills go unissued and enforcement is either weak or nonexistent.
As a result, municipalities cannot pay their bills, but continue to raise tariffs above those charged by Eskom, with the expectation the entire country should compensate. Paying customers subsidise non-paying ones and the cycle deepens.
Governance problem
The National Treasury’s smart meter grant programme was supposed to help fix this by reducing theft and improving billing accuracy. However, even with the billions spent and thousands of smart meters installed, municipal debt has continued its upward trajectory.
Technology cannot solve a governance problem, and municipalities that cannot enforce basic credit control will continue to haemorrhage revenue.
The consequences are devastating. As outlined in the finance minister’s speech on Wednesday, Johannesburg alone faces a R64bn water infrastructure backlog. Ageing pipes, leaking reservoirs and failing systems require huge investment, but municipalities drowning in debt cannot borrow or effectively spend what is needed.
Rising costs
Businesses face rising input costs, from energy to water, and many struggle to remain competitive in an already stagnant economy. It is time to confront reality: municipalities cannot fix this, at least not on their own. The private sector must be brought in, not as an optional experiment, but as an essential structural intervention.
South Africa has successful partnership models in other sectors. Fibre network operators such as Vumatel build infrastructure, while many service -provider partners handle billing, customer support and enforcement. Why can’t’ municipalities adopt a similar model for electricity and water?
Companies such The Meter Man, CitiQue and other metering and revenue specialists operate a model that can be exploited for this purpose. A properly designed public-private partnership (PPP) would allow them to manage metering, billing and revenue collection, areas where municipalities repeatedly fail.
With modern technology and professional enforcement, illegal connections can be detected in real time, leakages identified instantly and nonpayment drastically reduced. This would not privatise core municipal assets. Instead, it would professionalise the services that support them.
With modern technology and professional enforcement, illegal connections can be detected in real time, leakages identified instantly and nonpayment drastically reduced. This would not privatise core municipal assets. Instead, it would professionalise the services that support them.
Municipalities would retain oversight and ownership of core infrastructure, while the private sector handles the operational side. The result would be higher collection rates, lower theft and ultimately lower costs for paying customers.
The 2026/27 budget signals a potential shift towards stronger national interventions, including mandatory financial recovery plans and potential redistribution of grants for noncompliant municipalities. However, unless these measures are paired with a bold embrace of PPPs as outlined above, they will likely fail like previous interventions.
South Africa cannot afford another decade of rising tariffs, collapsing infrastructure and spiralling municipal debt. If we are serious about protecting the poor, supporting business growth and rebuilding local economies, we must adopt models that work.
PPPs offer the only credible path out of this crisis. Municipalities should manage the electricity and water grid while private companies manage billing, revenue and customer management.
• Mitchell, a former DA Johannesburg city councillor, works with the local government unit of the National Treasury in the office of the deputy finance minister. He writes in his personal capacity.
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