President Cyril Ramaphosa has warned that failing municipalities are holding back economic growth across South Africa. Speaking at the 2026 National Local Economic Development Summit at the Birchwood Conference Centre on Wednesday, he said weak local governance is directly limiting opportunities for businesses and residents.

Ramaphosa said the latest findings from the Auditor-General paint a bleak picture of local government. He pointed to weak financial management, poor revenue collection, neglected infrastructure, ineffective supply chain management and a lack of accountability that has led to irregular and wasteful spending.

Basic Services are Taking the Hi

According to Ramaphosa, these failures are not just administrative problems. They are hitting communities where it hurts most. He said the impact can be seen in unreliable electricity, water insecurity, poor roads, weak service delivery and unsafe trading conditions.

He made it clear that economic recovery at local level cannot happen unless governance improves first. Ramaphosa told delegates that service delivery and local economic development are tightly linked and that municipalities need to move beyond identifying problems and start implementing workable solutions.

Infrastructure Neglect Raises Alarm

A major concern raised by the president was the low level of spending on maintenance. He said municipalities are budgeting less than 1% for maintenance, far below National Treasury’s benchmark of 8% of the carrying value of property, plant and equipment. Ramaphosa warned that this chronic underinvestment threatens both infrastructure and the country’s economic potential.

He also called for stronger revenue collection and more private sector investment to help deal with infrastructure backlogs. Ramaphosa said municipalities must take the lead in removing service delivery blockages, especially around basic infrastructure.

Municipalities Told to Create Conditions for Business

Ramaphosa said reliable energy, water and transport systems are essential for sustainable growth. He added that municipalities must create an environment where businesses can operate and expand, from powering industrial parks to providing enough street lighting for township traders to work safely after dark.