Sanisha Packirisamy, Group Economist; & Tshiamo Masike, Economist at Momentum Investments

Who governs is only the beginning

South Africa’s local elections will test whether stronger political competition can translate into better economic management. Fragmented support could leave smaller parties determining who governs, while uneven turnout means the winning administration may draw its backing from a relatively narrow share of eligible voters. Building agreement around difficult reform, spending and investment decisions will therefore extend beyond assembling a council majority.

The economic payoff will depend on whether governing agreements survive long enough to implement credible budgets, retain skilled officials and develop infrastructure. Competition can sharpen accountability, but repeated leadership changes and bargaining over appointments can delay longer-term investment projects. Promises of better services also require an improvement in governance, particularly where weak collections and arrears already constrain municipal finances.

For businesses and households, unreliable water, electricity and roads raise costs and divert money towards private alternatives. Stronger municipalities can reverse that pressure, support property investment and create conditions for employment growth. Continued deterioration would weaken local revenue bases and increase pressure for national support. We would therefore judge the election outcome by the durability of governing arrangements and measurable improvements in delivery, with recovery likely to remain uneven across municipalities.

You can read Momentum Investments’ full note here.

ENDS