South Africa’s R890bn investment pipeline at risk over municipal failures

South Africa’s R890 billion investment pipeline is at risk of failing to translate into real economic activity unless municipalities urgently fix persistent governance and service delivery failures, President Cyril Ramaphosa has warned.

Speaking at the National Local Economic Development Summit on Tuesday, Ramaphosa said the country had made progress through structural reforms in energy and logistics, which have improved electricity generation, freight rail and port efficiency. However, he said the next phase of growth depends on local implementation capacity.

“We gather at a defining moment in our country’s development journey, one that calls for bold leadership and decisive action,” he said.

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He stressed that investors do not operate at national government sites but in local economies, placing municipalities at the centre of growth outcomes.

“When investors build their business in our country, they don’t set up factories or open call centres on the lawns of the Union Buildings,” he said. “This investment takes place in metros, cities, towns and villages.”

He warned that Auditor-General findings continue to show deep weaknesses in local government, including poor financial management, weak revenue collection and deteriorating infrastructure, which directly affect service delivery.

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“These challenges translate into unreliable electricity, water insecurity, poor roads, poor service delivery and unsafe trading environments,” he said.

“Without fixing governance, we cannot fix service delivery and without fixing service delivery, we cannot unlock local economic development.”

Small Business Development Minister Stella Ndabeni said MSMEs will carry the bulk of job creation going forward, noting that “9 million of the 11 million new jobs targeted by 2030 must come from small businesses”.

Ramaphosa added that bureaucratic delays at municipal level continue to block investment and small business growth.

“More often than not, bureaucratic delays at municipal level prevent local investments from getting over the line,” he said.

He warned that unless municipalities are reformed into effective “operating systems for growth”, both investment inflows and job creation targets will remain constrained.

*Phenyo Selinda is a Moneyweb Intern