(Bloomberg) -- Operation Vulindlela, a unit set up by South Africa’s Presidency and National Treasury to accelerate structural reforms and boost economic growth, will turn its focus to reviving municipalities.
The finances of South Africa’s local governments are in a dire state, with the biggest 130 municipalities likely to write off 6.6 billion rand ($363.5 million) in bad debt for the first quarter, according to Statistics South Africa data. This hampers their ability to service businesses, maintain sewerage systems and streets and pay money owed to suppliers including Eskom Holdings SOC Ltd.
Overloaded water treatment plants in eThekwini, which includes the city of Durban, pump sewage into the sea off some of the country’s premier beaches and refuse hasn’t been collected for years in parts of the Vaal Triangle industrial area. Johannesburg, the country’s biggest city, is $12 billion behind on maintenance and upgrades of its water, road and power networks.
“We’ve got to sort out the municipality infrastructure to support the growth of our economy,” David Masondo, one of the country’s two deputy finance ministers, said in speech on Tuesday. “The second phase of Operation Vulindlela is going to focus on this.”
The unit, which was set up in 2020, will also address issues related to housing and public transport and digital infrastructure. The additional focus comes after it proposed reforms that have accelerated the roll-out of privately-owned energy generation capacity and laid out plans to remedy the country’s collapsing freight rail lines and ports. It has also suggested ways to unblock a byzantine work permit system.
The unit will also seek to improve the lives of people affected by the legacy of apartheid, Masondo said. Thirty years on from the end of White-minority rule, the poor who are mainly Black are still housed on the periphery of cities in neglected townships far from potential places of employment.
“We’ve got to sort out this spatial inequality that we have,” Masondo said a meeting of the Development Bank of Southern Africa, a state-owned development finance institution.
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