5th Annual Local Government Conversations - White Paper Series, Webinar 2 of 4
Platinum sponsor: Business Engineering

Powers, Functions and the Future Shape of Local Government: Unpacking Chapter Two of the 2026 White Paper

Hosted by:Future Cities Africa and The Municipal Edge

Date:May 2026

Topics:White Paper on Local Government - Powers and Functions - Two-Tier System - Differentiation - Unfunded Mandates - Municipal Reform - Constitutional Framework

This webinar focused on Chapter Two of the draft White Paper on Local Government - arguably its most consequential chapter - which proposes a fundamental restructuring of how local government is organised, what powers municipalities hold, and how those powers relate to provincial and national government. Three panelists with direct knowledge of the system from constitutional, sector and practitioner perspectives engaged in one of the most candid exchanges in the series.

The core tension

South Africa's local government system has not been fundamentally revised since 1998. The assumptions underpinning the original White Paper no longer hold. Municipal dysfunction has moved from a localized problem to a national crisis affecting the economy. Yet the constitution gives municipalities original powers that cannot simply be removed. The debate is not whether reform is needed - it is how far, how fast, and whether restructuring the system will actually fix what is broken.

Speaker contributions

Prof. Jaap de Visser - National Research Chair in Multilevel Government, Dullah Omar Institute

Prof. de Visser, a member of the White Paper drafting team, presented the constitutional framework and the two proposals contained in Chapter Two. His contribution was structured, detailed and invited deliberate public engagement ahead of the comment deadline.

• The Constitution gives municipalities original powers through Schedules 4B and 5B - powers that belong to local government by right, not by delegation. These include water, sanitation, electricity reticulation, roads and a range of other functions.
• Two core problems drive the Chapter Two proposals. First, a lack of differentiation: all municipalities have the same powers regardless of capacity, yet capacity varies enormously. Second, the two-tier system between district and local municipalities is dysfunctional - riddled with overlap, contestation and confusion about who does what, with the mechanism for shifting functions between tiers last used in 2003.
• Proposal One - the radical option: move to a single tier of local government with new constitutional categories. Each category would carry a predefined set of functions - from a reduced rural mandate to an expanded metropolitan mandate. An independent national body would assign categories based on objective criteria, enabling a graduation system where municipalities move between categories as their capacity changes. This requires constitutional amendment and is a 10 to 15 year project.
• Proposal Two - the less radical option: keep the current constitutional categories but broaden the definition of Category A to allow secondary cities like Polokwane, George and Drakenstein to become standalone municipalities. Reorient district municipalities back to their original purpose of supporting and coordinating locals, remove directly elected district councillors so that district councils consist entirely of representatives from local councils, and fix the broken system of function assignment.
• Key risks of Proposal One: municipalities lose constitutional protection of their powers; a national body with political influence will decide what functions Cape Town and Johannesburg hold; and there is no guarantee that shifting a failing function upwards to a province that lacks capacity actually solves the problem.
• An alternative worth exploring: differentiation at the level of the service provider rather than the authority - allowing special purpose vehicles, parastatals or private entities to deliver services under municipal authority, preserving the council's role while professionalising the operational function.

"This is not just a proposal to abolish districts. It abolishes district municipalities and local municipalities and envisages new categories entirely. We need to divorce ourselves from the current notion."

Anton Groenewald - Group Head Regional Operations, City of Tshwane

Anton brought the practitioner's perspective - direct, provocative and grounded in 26 years of local government experience across multiple municipalities. His contribution challenged the premise that restructuring the system will solve a problem that is fundamentally about people, leadership and accountability.

• South Africa is changing the playing field, the rules and the referee - but the problem is the players. The same political and administrative failures that have produced the current crisis will operate within any new system unless the underlying accountability deficit is addressed.
• The Auditor-General's March 2026 report found that only 53% of municipalities had competent senior managers - defined as the municipal manager, CFO, head of engineering, head of planning and head of procurement. If those five people do not meet minimum requirements, no structural reform will produce a better outcome.
• Weak political leadership appoints weak municipal management. Weak municipal management produces weak performance. Weak oversight from audit and performance committees - often themselves poorly appointed - allows the cycle to continue unchallenged.
• Municipalities have self-imposed many of their own powers and functions problems - pursuing LED departments and tourism offices while neglecting the unglamorous but essential core: business regulation, health inspection, building compliance. COGTA has failed to define what those functions actually mean in practice.
• A third proposal: rather than restructuring tiers, COGTA should issue detailed regulations defining exactly what is meant by each municipal function - business regulation, environmental health, and others - and hold municipalities to that definition within their current capacity.
• On the two-tier system: districts had mechanisms available to them - intermunicipal agreements, shared services, regional solutions - that they largely failed to use. The result is a tier of government that could have justified itself but did not.
• R51 billion in unfunded mandates sits alongside R50-60 billion in unauthorised, irregular and fruitless expenditure and R45 billion in unspent grant funding. If even a portion of that were redirected into core municipal functions, it would transform service delivery without a single legislative amendment.
• Good performance must be rewarded. The current system incentivises failure - poorly performing municipalities receive bailouts and additional grants, while well-run municipalities receive nothing extra for their discipline. Differentiation must apply to grant allocations, not only to powers and functions.
• Graduated loss of autonomy - where sustained non-performance triggers increasing oversight, loss of decision-making authority, and ultimately the threat of disbandment - is a more immediate and enforceable response than constitutional reform.

"We are changing the playing grounds, the rules and the referee. The problem is the players. And I worry that the debate on powers and functions is deflecting from what the actual issue is."

Mr. Nkosinathi September - Senior Advisor: Financial Resilience, SALGA

Nkosinathi presented SALGA's formal position on Chapter Two, anchoring the association's response in the constitutional status of local government and the need to protect municipalities from further unfunded obligations while acknowledging the need for operational reform.

• SALGA will not support any reform that dilutes municipal constitutional status, re-centralises functions without justification, or perpetuates unfunded mandates. The central test is whether the proposed framework enables municipalities to perform their developmental mandate effectively, sustainably and with clear lines of responsibility.
• The constitution establishes local government as a distinctive, interdependent and interrelated sphere - not an administrative extension of national or provincial government. Section 154 and 155 place duties on national and provincial government to support and strengthen municipal capacity, not to absorb municipal functions.
• Functional overlap - particularly in water, sanitation, municipal health, planning, disaster coordination and roads - must be resolved through clear allocation backed by objective capacity tests, not through further fragmentation.
• The library function VAT dispute in the Western Cape illustrates the problem precisely: a constitutionally provincial function performed by municipalities, with municipalities penalised for the funding gap created by the province's own design. This pattern repeats across the system.
• Provincial oversight is often experienced as compliance-heavy and intrusive rather than supportive. Section 139 interventions must be calculated and used as a last resort, not a reflex. Provincial involvement must be rebalanced toward structured support and early warning.
• SALGA commissioned a funding model study - presented to the president - that documents how the current equitable share allocation (9.7% of nationally raised revenue, based on 1998 assumptions) fails to fund what municipalities are actually expected to deliver. The study argues for an increase to 17-18%. Funds must follow functions.
• SALGA supports a differentiated approach to districts - rejecting simplistic abolition but advocating for fit-for-purpose models that reflect local context, capacity and need.

"Where there is operational inefficiency, it must be addressed. But constitutional protection must remain. The roles must be clear, and funds must follow functions."

Key themes from the discussion

The open discussion that followed produced some of the session's sharpest exchanges, including several points of agreement across what appeared to be divergent positions.

• All three panelists agreed that the two-tier system is not working as intended - but disagreed on whether abolishing a tier is the right response or whether better use of existing mechanisms would suffice.
• Prof. de Visser challenged SALGA's constitutional protection argument directly: communities without water cannot drink or eat constitutional protection. The argument must be buttressed by a credible answer to what local government itself will do to fix local failures.
• Anton challenged the 10 to 15 year timeline for reform given the rate of disintegration. Both proposals could be implemented in five years or less if political will is applied with urgency.
• Section 139 of the Constitution was identified by multiple panelists as a mechanism that does not work in its current form. A reimagined Section 139 - as a long-term incubator for failing municipalities rather than a blunt intervention - was proposed as an alternative to structural reform.
• Districts were defended not as a tier worth preserving for its own sake, but as a mechanism that could have worked had intermunicipal agreements been properly used. Anton cited three concrete examples from his career where regional solutions were within reach but failed due to zero-sum negotiation by municipal leaders.
• The question of provincial capacity was raised sharply: if functions are shifted to provinces, do provinces have the capacity to absorb them? Nkosinathi said plainly that he does not trust the province to perform functions municipalities are currently struggling with. Prof. de Visser's response was that the shift need not mean operational takeover - provinces could hold the authority while contracting delivery to capable entities.

Key takeaways for practitioners

1. Read Chapter Two of the draft White Paper. Comments closed on 28 May 2026, but the drafting team continues to consider inputs as the document is refined toward finalisation.
2. Structural reform alone will not fix the crisis. The combination of weak political leadership, weak municipal management and weak oversight creates the dysfunction - and will reproduce it in any new system unless addressed directly.
3. The legislation already contains many of the solutions. Intermunicipal agreements, Section 139 powers, MFMA Sections 135 to 148, and Sections 61 to 66 provide extensive tools that practitioners have not fully used.
4. Differentiation must apply to grant allocations as well as powers and functions. Rewarding failure while penalising good performance is structurally counterproductive.
5. R51 billion in unfunded mandates and R50+ billion in irregular and unspent funding represent a resource reallocation opportunity that does not require constitutional amendment.
6. The definition of municipal functions needs to be clarified through regulation. Municipalities have interpreted their mandates unevenly, often pursuing visible activities while neglecting unglamorous but essential core responsibilities.
7. Provincial oversight must be rebalanced from compliance enforcement to structured support and early warning. The current model generates reporting burden without improving outcomes.

Hosted by Mr. Dan Claasen, MD, Future Cities Africa

Moderated by Mr. Zolani Zonyane, The Municipal Edge

CPD points available- contact cpd@cigfaro.co.za