South Africa’s towns are being abandoned by businesses – and it will cost millions of jobs

The Congress of South African Trade Unions (Cosatu) has urged the government to address local governance issues or risk the mass exodus of private sector companies.

Speaking ahead of its Worker’s Day celebrations on 1 May, the country’s largest trade federation said South Africa’s local government needs to be overhauled; competent managers appointed, corruption dealt with and placed on a sustainable path.

“Deteriorating basic services are a threat to the jobs of millions as companies close and relocate to better serviced towns. The government and, in particular, the law enforcement agencies need to tackle corruption decisively.  Investigations, trials and sentencing for corruption cases must be prioritised. Public procurement needs to be overhauled, and its leakages plugged,” it said.

Cosatu said drastic interventions are also needed to secure and fix Transnet and Metro Rail.

“Transnet is key to saving and creating jobs in mining, manufacturing, and agricultural sectors. An efficient Metro Rail will enable workers to get to work safely at an affordable price and on time.  Turn around plans are needed for other embattled state-owned enterprises to ensure they are enabled to play their role in the economy and their workers are not sent to the unemployment queue.”

“Every possible public and private financial resource needs to be mobilised to stimulate economic growth.  This must include a massive buy local campaign that includes government, state-owned enterprises, businesses, workers and consumers and targets key locally produced goods.  Pension and investment funds must play their part too in supporting local companies.”

Mass exodus 

Cosatu has previously cautioned that poor service delivery will lead to job losses in South Africa. In a presentation to parliament on the Division of Revenue Bill at the end of March, the trade federation slammed the government for being silent on these failures and the impact on the local job market.

“The most alarming part of the Division of Revenue Bill is that it is absolutely silent on the chaos and rampant financial mismanagement, collapse in good governance, and ballooning corruption that has come to characterise the public’s experiences with local government,” it said.

“In 2013, 86 out of the 259 municipalities were in financial problems. In 2019, it had risen to 175. In 2022, according to the Auditor-General, it has risen to 90%. Yet the Bill and Budget are silent on what is the government’s plan to fix this crisis.”

Cosatu warned there are ‘real consequences’ to the government’s failure to fix local government.

“Municipal workers are being sent home unpaid. Roads, water, sanitation, and electricity are deteriorating at an alarming pace. Companies are closing, retrenching, and abandoning entire rural towns.

“Yet it seems our politicians have no idea on what needs to be done. Less than a year after the 2021 local elections, Mangaung Municipality is on the verge of being put under administration.”

In June 2021, former finance minister Tito Mboweni warned that the National Treasury was increasingly being asked to intervene in the financial affairs of municipalities across South Africa as they were unable to provide essential services.

The fact that South Africans keep taking the government to court shows service delivery is failing, president Cyril Ramaphosa said in a February address.

“The fact that some South Africans are resorting to the courts to uphold their rights points to widespread and systemic shortcomings in service delivery. Our first responsibility as the government is to ensure that we address all these shortcomings and that all persons in this country can fully exercise their rights.”

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