Local elections have always played second fiddle to national ones in South Africa. Only 45.86% of registered voters turned out in 2021, against 58.6% at the 2024 general election. That disparity reveals a great deal about where most South Africans believe power resides. That instinct was easier to defend when one party ran most of the country's councils by default. In 2026, this is no longer the case.
Municipalities are responsible for water, electricity, roads and rates, which cover most of what decides whether a business can operate and whether a household gets to month-end. Interest rates and inflation prints may dominate the headlines, but at the end of the day, the municipality decides whether water comes out of the tap.
Right now, much of that system is broken. By June, municipalities owed creditors R185.2 billion, up 19% in a year, and by August their overdue debt to Eskom alone had reached R122.5 billion. Based on 2023/24 data, Treasury classified 162 municipalities, more than half of the total, as financially distressed. The following year, the number of municipalities adopting fully unfunded budgets rose to 116, nearly half of all local governments. Structural interventions brought that down to 84 in the next multi-year budget cycle. In July, Treasury went further and withheld R13.5 billion in transfers from 69 councils.
Sooner or later, that debt finds its way to the national balance sheet. Unpaid electricity bills become Eskom's funding problem, and Eskom's funding problem has a habit of becoming the sovereign's. That sits awkwardly with Treasury's news that debt has stabilised at 78.4% of GDP, the first time it has done so in close to two decades.
It also comes at a bad point in the cycle. Growth for 2026 has been revised down to 1.2% after a contraction in the second quarter, and the fuel shock has pushed inflation further above the new 3% target. With the economy growing this slowly and so little room in the fiscus, wasted rands at local level hurt more. The councillors elected this week are likely to work under the first major rewrite of the Municipal Finance Management Act in over 20 years. The bill, published in October, would tighten personal liability for officials and politicians who sign off irregular spending, though it still has to pass through Parliament. Legislation like that is only as good as the people tasked with enforcing it.
The ANC's share of the vote has slid from 58% in 2019 to 46% in 2021 and 40% in 2024, and polls now have it somewhere between 22% and 32%. Coalitions are already the norm at local level, up from 27 in 2016 to 70 by 2021, and almost every metro is expected to end up with one after Wednesday.
This is the first time the whole country gets to pass judgement on the Government of National Unity. One poll found 68% of voters would back ANC, DA coalitions in councils where the two parties have a majority between them. If that is how Johannesburg, Tshwane and Ekurhuleni end up being governed, it bodes well for the staying power of the national arrangement. If the ANC turns to the MK party and the EFF instead, policy heads somewhere quite different, and in eThekwini, where polls put MK at 43% to 48%, that option is very much live.
Fragmentation also hands real power to small parties, because in a hung council a handful of seats can decide who becomes mayor. Low turnout makes that worse, since a well-organised minority can end up making the decision for everyone else. A bigger turnout gives councils a clearer mandate, and for a country that needs its municipalities functioning, that alone is reason enough to go and vote.
What we're watching from a market perspective
At the time of writing this piece, the rand is trading around R16.64 to the dollar and the SA 10-year is trading between 8.40% and 8.55%, marking its lowest level in over a month. This recent bout of bond strength is primarily driven by improved investor confidence following the Treasury’s recent Medium-Term Budget Policy Statement (MTBPS), which committed to strict fiscal discipline, debt stabilisation, and a new principles-based fiscal anchor. How long that holds will depend partly on what happens after Wednesday.
For markets, this election will be decided in Johannesburg, Tshwane and Ekurhuleni. If the ANC and DA end up governing those cities together, investors will read it as proof that the GNU can hold beyond the Union Buildings, and this year's narrowing in South Africa's risk premium has room to run. A deal with MK or the EFF brings back the policy uncertainty investors were pricing before the GNU, this time with 2029 in view. The rand would likely take the first hit, with the long end of the bond curve not far behind.
The bond market will also be watching who inherits the municipal books. Incoming councils take on debts to Eskom and the water boards, and every one that settles those bills on time takes some pressure off state-owned company debt and, in time, the sovereign. Moody's nod to Tshwane's improving finances shows the ratings agencies notice when a council gets its house in order. The ANC's reading of its own result will also count, since a lurch toward its populist rivals would be felt far beyond local government.
Coalition negotiations could make for a noisy few weeks. Over a longer horizon, industrial property, logistics, bank lending books and infrastructure spending all rely on councils that keep the lights on and the water running. As South Africans, we have a democratic right to choose who runs them, and the case for using it has never been clearer. Exercise that right on the 4th of November.
First published on LinkedIn, 3 November 2026.