Municipalities that can't pay Eskom didn't fail in July. They failed earlier — in the council chamber. The new LGCSI index explains why.
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A municipality that could not pay Eskom in July 2026 did not begin failing in July. The failure started earlier, when rules governing political power proved weaker than the contest for it, and when administrative continuity collapsed with each change of executive.
The Local Governance & Coalition Stability Index, launched on Wednesday, 2 September 2026, by the Pan-African Institute for Fiscal and Policy Studies (PA-IFS), examines that earlier institutional failure.In July 2026, National Treasury invoked section 216(2) of the Constitution and halted equitable share transfers to 69 municipalities.
The funds have since been released, the Financial and Fiscal Commission questioned how the instrument was applied, and Parliament directed that enforcement be accompanied by support rather than used as a recovery strategy.I argued then that withholding would not repair a broken budget framework.
On Wednesday night, 2 September 2026, PA-IFS published the evidence. The Local Governance and Coalition Stability Index (LGCSI) is the first volume of our Municipal Intelligence Series. It examines 103 of South Africa’s 257 municipalities across a full term, from the 2021 elections to now, using only statutory data sources: the AGSA, National Treasury, CoGTA gazettes and IEC council records. LGCSI asks one question: Can these councils govern themselves?
Because the index chose its sample deliberately, and deliberately over-sampled councils in distress, it cannot tell you what proportion of South Africa’s municipalities are failing. It does not rank municipalities. It does not rank parties. And it does not forecast any election result.A municipality that could not pay Eskom in July 2026 did not begin failing in July 2026. I
t failed earlier, in the council chamber, when the rules governing who holds the executive proved weaker than the contest for it. Across eight metros in one term (2021–2026), we recorded anything from one mayor to six. Each turnover dissolved the entire mayoral committee, and the municipal manager’s office rotated through appointments, court removals and acting incumbents.
That is the mechanism, and the LGCSI’s central contribution. We call it the administrative shield: whether, when the mayor changes, the municipality’s accounting officer and chief financial officer keep their jobs. Where it holds, the budget still passes, the bulk account is paid, the audit gets done. Where it breaks, or where they lose their jobs, all three are likely to stop. The damage does not travel through the politics. It travels through the administration.
The Municipal Structures Amendment Bill (Coalition Bill) now before Parliament regulates the political tier. A reform silent on the accounting officer leaves that mechanism intact. The most uncomfortable finding is that instability is not a property of coalition government. Mangaung was governed by one party with an outright majority, and records the same executive churn, the same removal of senior officials and the same fiscal deterioration as the most fragmented coalition metro in the country.
Midvaal is also single-party, and among the most stable in our sample. What separates them is not the number of parties, but whether the governing arrangement is written down and enforceable.Of the 94 councils assessed on this measure, 18 have some sort of governing agreement that can be read within the LGCSI sample. Those with published, binding agreements and independent dispute resolution experienced limited disruption across the term. Those with pacts but no way of settling a dispute outside the chamber were calmer, but not stable. Tshwane signed a formal pact in December 2021; it collapsed in September 2024. Clearly, signature is not architecture.There is a second half, which councils do not control.
Local government delivers roughly 46% of the frontline functions citizens experience directly and receives 9.9% of nationally raised revenue to do it. Municipalities spend about R31-billion a year on functions assigned to other spheres — libraries, primary healthcare support, housing administration. That is not a governance failure. It is an arithmetic one, and enforcement does not resolve arithmetic.
The LGCSI therefore proposes one package, in this order:
Institutionalise the politics: written, published coalition agreements lodged within 30 days, with independent dispute resolution, and a constructive vote of no confidence, removal only where a successor is elected at the same sitting.
Protect the administration: decouple the tenure of the municipal manager and chief financial officer from the political executive, with caretaker delegations that keep bulk creditors paid through a transition.
Fund and enforce the mandate: withhold the equitable share from councils that adopt unfunded budgets, but with a defined cure, differentiated to the council, and paired with the duty to build capacity.
And beneath all three, overhaul the division of revenue framework. Note the order. We support withholding. We place it third. Applied first, it disciplines a council that has not been given the means to comply. Councils elected on 4 November 2026 must form executives within 14 days under the current legal framework, and no law or regulation requires those terms to be written down.
In December 2026, the next transfer decision falls due. The LGCSI is not merely a record of the past municipal term. It describes the conditions under which the next one will begin. The question is whether South Africa will institutionalise its municipal politics, protect professional administration and fund the mandate before the cycle starts again.
The full Local Governance & Coalition Stability Index is available at: www.pa-ifs.com
Prof Dumisani Jantjies is former PBO Director and the Macroeconomic and fiscal policy analyst and lead author of the Local Governance & Coalition Stability Index (LGCSI)
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