By Gillian Schutte
As South Africa approaches the November 2026 local government elections, the DA is openly advancing private-sector participation in municipal services. The ANC promises to reverse outsourcing, even as its national administration pursues reforms designed to attract private investment into water and municipal infrastructure. Behind the electoral confrontation lies a much larger struggle over public wealth, democratic control and the future of the working-class majority.
South Africa’s municipalities have been systematically weakened through decades of political mismanagement, corruption, neglected infrastructure, outsourcing and the erosion of public technical capacity. Now, with water systems collapsing, electricity infrastructure deteriorating and communities enduring the consequences, the Democratic Alliance has arrived with its grand solution: hand more of the work to private companies.
There is an almost macabre political logic at work here. Public institutions are allowed to deteriorate until their failures become unbearable. As Noam Chomsky observed, the standard technique of privatisation is to “defund, make sure things don’t work, people get angry, you hand it over to private capital.” The resulting public desperation creates an opening for private capital to present itself as the only credible alternative. The very political and economic arrangements that helped produce the municipal crisis are then offered as its cure.
The DA calls this pragmatism. Its 2026 local government election manifesto promotes private investment, public-private partnerships and external service providers across essential municipal functions. Party leader Geordin Hill-Lewis has defended the approach by arguing that municipalities need to deliver services efficiently rather than insist on performing every function themselves.
The argument sounds plausible to somebody who has spent three weeks without running water. It sounds considerably less reassuring when examined through the history of South African municipal commercialisation and the political economy of private concessions.
In August 2026, DA federal council chair Ashor Sarupen explained that private companies would be invited to supply water and other services through competitive contracting. In September, he went considerably further, describing long-term concessions lasting five, ten or fifteen years, under which private companies would finance infrastructure, manage operations and recover their investments.
Such concessions transfer substantial operational authority to private commercial interests while allowing municipalities to retain legal ownership of their assets. No outright sale is required for private operators to acquire long-term influence over the management of essential public infrastructure.
The DA insists that municipal councils would continue to set tariffs, determine policy and enforce service standards. This distinction has legal and administrative significance, although it leaves the wider question of democratic control unresolved. A municipality that depends on a private operator for the delivery, maintenance and technical management of an essential service has already surrendered considerable practical power.
The municipality may still own the pipes. The company may effectively control what happens inside them.
And the company is there to make money.
Private investment requires a financial return. Long-term concessions need mechanisms through which investors recover capital, financing costs and profit. These obligations enter an already strained municipal economy in which millions of households struggle to pay for essential services.
The DA has presented outsourcing as a means of escaping corruption and inefficient procurement. Yet long-term contracts introduce their own risks: weak oversight, inflated financing assumptions, costly contractual disputes, dependence on a dominant provider and the loss of the municipality’s technical competence. A badly designed concession can lock a municipality into an expensive arrangement for years.
Indeed, outsourcing is hardly an unfamiliar experiment in South Africa. It is already embedded in the municipal system that the DA claims it intends to rescue.
And this brings us to the ANC.
The ANC’s inconvenient history
The ANC’s 2026 local government manifesto promises to reverse excessive outsourcing and restore municipal capacity. President Cyril Ramaphosa has criticised the widespread dependence on contractors, while the party has pledged to bring functions such as security, cleaning, waste collection, meter reading and water tankering back into municipal employment.
On the principle of rebuilding direct public provision, the ANC’s stated position offers a different approach from the DA’s concession-driven model. Its credibility, however, must be tested against its own record.
The ANC cannot present municipal commercialisation as an unfortunate inheritance for which everybody else bears responsibility.
In 1999, the ANC-led Johannesburg administration introduced the iGoli 2002 restructuring programme. The initiative corporatised major municipal functions, including water, electricity and waste management, and reorganised public services around commercial management principles.
In 2001, Johannesburg Water entered a five-year private management arrangement involving the multinational Suez and its partners. The city retained ownership of its water utility while a private consortium acquired a substantial management role.
The distinction between public ownership and private operation deserves close examination. South Africa has already lived through arrangements in which municipal assets remained publicly owned while commercial incentives shaped the provision of services.
The iGoli programme generated fierce opposition from the South African Municipal Workers’ Union, which recognised the longer-term implications for public employment and municipal accountability.
The ANC’s embrace of commercialisation occurred within the wider economic trajectory established after 1994, particularly the market-oriented restructuring associated with GEAR. Fiscal discipline, cost recovery and commercially organised public entities increasingly shaped the relationship between the democratic state and the communities it was supposed to serve.
Political liberation had transferred formal governmental authority. It had not dismantled the economic power through which capital could continue to influence the country’s developmental priorities.
Now the ANC wants voters to believe that its promised re-municipalisation represents a decisive break from that history. Yet the government it leads is simultaneously advancing reforms that expand opportunities for private investment in essential public infrastructure.
One government, two election manifestos
On 23 July 2026, President Ramaphosa released the National Water Action Plan. Among its proposed interventions were institutional restructuring, revenue ring-fencing and increased private-sector investment in water infrastructure.
This was followed by continuing work under Operation Vulindlela, the economic reform initiative driven by the Presidency and National Treasury. In September, Treasury Director-General Duncan Pieterse outlined plans for a framework governing private-sector participation in water delivery, particularly at municipal level.
Meanwhile, the Metro Trading Services Reform Programme is reshaping how South Africa’s eight metropolitan municipalities manage water, sanitation, electricity and waste services.
The programme is supported by major international financing arrangements, including a US$925 million World Bank loan to the national government and a US$500 million sovereign-backed loan from the Asian Infrastructure Investment Bank, within a wider government-led financing programme.
These loans support institutional restructuring and improvements in municipal financial and operational performance. The World Bank programme links performance-based grants to measurable results, including improved revenue collection, cost recovery and the financial management of municipal trading services.
The financing arrangements do not require the sale of municipal assets or the transfer of municipal services to private operators. Their immediate objectives concern the financial and operational performance of publicly administered services.
Their significance lies in the wider economic direction of national municipal policy. Revenue collection, cost recovery, institutional restructuring and financial performance are increasingly central to how municipalities are assessed and funded. These mechanisms can support the restoration of public services, although they also raise questions about affordability, redistribution and the extent to which financial criteria are allowed to determine access to essential infrastructure.
Alongside these reforms, the government’s National Water Action Plan and Operation Vulindlela are actively developing opportunities for private investment and participation in water infrastructure and service delivery. These initiatives establish a separate, documented policy direction through which commercial operators and investors may acquire a greater role in municipal services.
Taken together, the programmes reveal an unresolved tension within ANC policy between rebuilding direct municipal capacity and expanding the role of private capital in essential infrastructure.
The ANC campaigns against excessive outsourcing while its national administration invites private investment into the infrastructure and financing arrangements of municipal service delivery. The DA goes further, actively campaigning for private operators and long-term concessions.
The parties have sharply different local government manifestos, and they have not established a common programme to privatise municipalities. Yet they govern together nationally, and the direction of national restructuring creates openings that are compatible with significant elements of the DA’s preferred model.
The ANC cannot resolve this contradiction by promising to employ cleaners and security guards directly while leaving unanswered questions about who will finance, operate and exercise long-term authority over the most valuable components of municipal infrastructure.
The DA’s insistence that legal ownership remains public while operational control passes to private contractors also fails to resolve the underlying problem.
The political contest is over who commands the infrastructure, who controls the revenue, who bears the risk and who benefits financially.
The workers have already identified the danger
The South African Municipal Workers’ Union has been explicit about the consequences of continued commercialisation.
In its memorandum of demands dated 9 July 2026, SAMWU criticised National Treasury’s municipal business-unit restructuring, warning that it could fragment municipal departments, weaken collective bargaining and prepare the ground for outsourcing and privatisation.
The union demanded the rebuilding of internal municipal capacity, the insourcing of essential functions and an end to the dependence on consultants and private contractors.
Its warning carries particular significance given the ANC’s historical relationship with organised labour.
On 14 October, COSATU’s 15th National Congress formally rejected outsourcing and structures facilitating privatisation. Yet the federation also maintained electoral support for the ANC and SACP.
These contradictions reveal the increasingly difficult position of organised workers whose political alliances remain tied to a governing party with an inconsistent record on public provision.
The problem extends beyond threatened jobs. Every technical function outsourced for years weakens the municipality’s ability to perform that function independently. Experienced workers retire without being replaced. Apprenticeships disappear. Engineering departments lose institutional knowledge. Municipal administrations are reduced to managing contracts with companies that possess the technical expertise once held by the public service.
The resulting loss of municipal capacity is then used to justify further outsourcing.
This is a self-reinforcing political economy of institutional dependence, with private firms gaining commercial opportunities from the very public incapacity that contracting can help perpetuate.
Privatisation does not eradicate corruption. It can relocate it.
The Auditor-General’s June 2026 report on the 2024-25 financial year presents a devastating account of local government administration.
Only 39 municipalities, representing 15% of municipalities audited, achieved clean audits. Municipalities and their entities incurred approximately R40.14 billion in irregular expenditure during that financial year. All eight metropolitan municipalities had findings relating to procurement and contract-management compliance.
Irregular expenditure does not automatically establish theft. The scale of non-compliance nonetheless demonstrates the institutional weakness through which public money is being administered.
This raises an elementary question.
If municipalities struggle to manage ordinary procurement contracts lawfully, why would transferring essential services to private providers under complex, long-term concession agreements automatically produce stronger public accountability?
Private companies do not eliminate the need for competent public administration. Their involvement creates additional demands for effective regulation and contractual oversight.
A municipality incapable of maintaining its own infrastructure may also lack the expertise required to assess private investment proposals, interrogate financing arrangements, enforce performance clauses or prevent the manipulation of contract prices.
The DA’s solution rests on a contradiction. It proposes an expanded private-contracting system while citing the incapacity of the institutions that would be responsible for supervising those contracts.
And the ANC’s record offers little reassurance. Its own municipal tender system has repeatedly generated opportunities for politically connected contractors to profit while public services deteriorate.
The beneficiaries may differ between patronage networks and corporate concessionaires. The danger of public revenue being diverted away from direct service provision remains.
The apartheid city is now being offered to investors
Municipal privatisation cannot be understood without confronting the class and spatial structure of South Africa.
The country’s infrastructure remains profoundly unequal. Affluent suburbs possess deeper revenue bases, more established networks and greater capacity to mobilise political pressure. Townships, informal settlements and historically neglected rural areas carry the accumulated costs of apartheid planning, insufficient investment and decades of unequal development.
Private capital assesses infrastructure in terms of financial viability, future revenue and investment risk. Working-class communities require services according to social need.
These priorities do not automatically coincide.
A commercial operator has a financial interest in reliable customers, predictable payments and recoverable investments. A democratic developmental municipality has obligations extending to households with little or no capacity to pay.
The difference is fundamental.
Water and electricity form part of the social wage. They are indispensable to health, education, household reproduction, local production and economic participation. Their provision cannot be judged exclusively through the balance sheet of a municipal trading account.
Of course, public utilities require financially sustainable administration. Infrastructure requires maintenance, corruption demands action and revenue needs proper management. Ring-fencing revenue for maintenance has a legitimate rationale.
But financial sustainability without an explicit redistributive framework risks turning the inability to pay into exclusion from essential services.
The constitutional obligation to prioritise basic needs requires a funding model that recognises poverty, unequal municipal revenue bases and the historic infrastructure backlog.
The failure to maintain public institutions cannot reasonably serve as a permanent argument for making access to public goods dependent on their attractiveness to investors.
Rebuilding the municipality means rebuilding public power
South Africa needs a national programme of municipal reconstruction that restores the technical, financial and administrative capacity of local government.
That means permanent engineering and maintenance teams, proper apprenticeship programmes, competent appointments, enforceable anti-corruption controls, transparent public procurement and adequate fiscal transfers to municipalities serving communities with limited revenue bases.
It means rebuilding publicly owned and democratically accountable water and electricity systems, protecting affordable basic services and ensuring that workers possess the tools, training and authority necessary to deliver them.
It also means examining existing contracts, publishing their full costs, identifying where outsourcing has created avoidable expenditure, and bringing viable core functions back under direct municipal control.
Private companies may supply equipment, undertake specialised construction or provide services that a public authority genuinely cannot economically perform itself. Purchasing expertise is a different proposition from organising the state around long-term dependence on private operators.
The test of public policy lies in whether the municipality emerges with greater competence and independence, or whether each new contract leaves it more dependent on its contractor.
The DA’s programme risks institutionalising the latter arrangement. The ANC’s promise of re-municipalisation will amount to little unless it reverses the structural and fiscal conditions that have driven municipal outsourcing for decades.
As the 4 November elections approach, voters are being presented with two different political languages addressing the same municipal catastrophe.
One party confidently offers the private sector as the solution. The other promises to rebuild the public sector while its national government pursues greater private investment and commercially structured reform.
Both owe the country an account of how their proposals will protect public control, working-class livelihoods and universal access to essential services.
South Africans have already paid for municipal failure through broken pipes, overflowing sewage, unreliable electricity, failed infrastructure and public money lost to wasteful administration.
They cannot now be expected to accept corporate returns as the unavoidable price of restoring the services their taxes and tariffs were supposed to provide.
The municipality belongs to the public. Its assets were built through public resources and generations of labour. Its services exist to sustain communities and enable social and economic development.
The ANC helped construct the municipal order that produced this crisis. The DA now proposes to expand private participation in the provision of essential municipal services. Neither party is entitled to treat public desperation as consent to transfer greater economic power over public infrastructure to corporate interests.
The people need water in their taps, electricity in their homes and municipalities capable of serving them. They do not need another shareholder standing between them and the services to which they are entitled.
