By Radarr Africa Business Desk
LAGOS, November 5 (Radarr Africa) – South Africa’s municipalities owe the state power utility Eskom 122.5 billion rand, and analysts warn that inconclusive local elections could complicate efforts to recover the money, according to a Reuters report published by CNBC Africa.
The report, datelined Johannesburg on November 3, said municipal debt is squeezing Eskom and straining public finances. Wednesday’s municipal elections were expected to produce no outright majority in major metropolitan areas, Reuters said.
Eskom said the debt “weighs heavily on the national budget, the sovereign credit rating and borrowing costs”. The utility said municipal obligations remain unchanged even if a new administration takes office, but that a change in leadership brings uncertainty. It called Treasury enforcement measures not sufficient alone.
Households and businesses owe municipalities 484.5 billion rand ($29.2 billion), and only 63.9 per cent of billings is collected, according to National Treasury budget data cited by Reuters. In July, 38 of 69 municipalities concluded repayment plans, and 4.2 billion rand was paid toward creditor debt. Of 71 municipalities approved for a debt relief programme launched in April 2023, only eight are compliant, and the other 63 are overdue on current-account payments, Eskom said.
Finance Minister Enoch Godongwana froze funding to offending municipalities in July and set a compliance roadmap with deadlines running to November 30, the report said.
The risks reach the national balance sheet. The government has provided 663 billion rand ($40 billion) in guarantees to state-owned enterprises, more than half of them to Eskom, according to S&P Global as cited by Reuters. S&P upgraded South Africa’s sovereign rating in November 2025, the first upgrade in nearly 20 years, but warned that municipal arrears could “pose significant risks” to Eskom’s turnaround. Moody’s changed its outlook on South Africa to positive in May and also flagged growing municipal arrears.
Louw Nel, senior political analyst at Oxford Economics Africa, said the number of hung councils could rise to “maybe 100”. South Africa had 70 hung councils after the 2021 local elections, Reuters noted.
Jason Lightfoot, senior portfolio manager at Futuregrowth, said there was a risk that the government might have to tap into the guarantees, though it was not his base case. He added: “Municipalities in their own right are unfundable.”
In Matjhabeng, a mining town in the Free State, residents have gone more than 20 days without water, Reuters reported. The municipality owes its water board 9.5 billion rand. Reuters linked the debt problem to dry taps and power cuts in several parts of the country.
National Treasury said it had no immediate comment when approached by Reuters.
The report used an exchange rate of 16.6236 rand to the dollar. It did not give election results, which were not available when it was written, and it did not say how Eskom’s municipal arrears have changed over the past year.
The next fixed date in the report is November 30, the deadline in the compliance roadmap set by the finance minister for municipalities that have fallen behind on payments.
