On 17 October 2024, Prof Nara Monkam, Head of the Public Policy Hub and Chair in Municipal Finance in Africa at the University of Pretoria, presented at a webinar hosted by the Western Cape Provincial Government's Department of Environmental Affairs and Development Planning. The focus of the webinar was on municipal funding and financing for waste management.

In her presentation, Prof Monkam tackled the growing challenges local governments encounter in financing solid waste management systems. She pointed out the limitations of relying solely on national or external funding, which often falls short of covering rising costs. “To operate and sustain these systems effectively, local governments must explore new, reliable, and self-generated funding sources that support essential improvements and long-term operations,” she stated.

Prof Monkam outlined several strategies for local governments to enhance their revenue generation. A key approach is increasing operational efficiency. “Before exploring new funding sources, existing budgets can be optimised through cost-avoidance measures and increased efficiencies within current systems,” she explained. This includes strategies like reducing waste generation, lowering transportation costs, and targeting low-value waste streams to minimise tipping fees. Additionally, optimising waste management operations through better planning and technological investments can yield significant cost savings while maintaining service quality.

Improving payment collection from citizens was another critical area highlighted by Prof Monkam. “Local governments must enhance payment collection systems to ensure that all individuals owing fees pay their fair share and enforce compliance,” she urged, noting particularly high non-payment rates in some municipalities. Prof Monkam also highlighted the importance of hotel occupancy fees or resort taxes, suggesting that tourists – who generate substantial waste – should contribute to waste management costs.

Additionally, Prof Monkam noted that “local governments can reduce waste management costs by selling compost”. She explained that composting biodegradable waste, which accounts for over half of the waste in low-to-middle-income countries, can generate significant revenue. Furthermore, recycling programmes play a crucial role in diverting waste from landfills, minimising environmental impacts, and providing financial benefits to municipalities. As she emphasised, “recycling facilities can transform waste into new materials, generating revenue while simultaneously reducing the environmental footprint”.

Lastly, Prof Monkam highlighted the potential for generating energy from waste. “Landfills are not just sites for waste containment; they also present revenue-generating opportunities by producing biogas and electricity from decomposing biodegradable waste,” she pointed out. She added that waste-to-energy technologies could help South Africa address its ongoing energy crisis by converting waste into renewable energy sources like electricity and fuel. “This can aid South Africa in addressing the energy crisis associated with load shedding,” she concluded.

Prof Monkam’s presentation underscored the importance of innovative solutions for sustainable and self-sufficient solid waste management. The aim was to equip municipalities with various funding options and real-world examples, providing them with the knowledge and tools needed to enhance their waste management systems and overcome financial challenges in implementing solid waste management programmes.

Another participant in the webinar, the Western Cape Provincial Treasury (hereafter the Treasury), highlighted the evolving dynamics in municipal funding, particularly the urgent need for municipalities to diversify their revenue sources. As municipalities increasingly depend on their own taxes and borrowing to fund growth, revenue from transfers and service charges is declining, particularly as customers transition off the grid. The Treasury stated: “The funding mix of a typical municipality is likely to shift, with increased reliance on own taxes and less revenue from transfers and service charges due to customers moving off the grid.” They contrasted the financial strategies of smaller rural municipalities, which are more reliant on grants, with those of larger metros and secondary cities that leverage their own revenue streams and borrowing for project financing.

The Treasury also addressed the financial constraints faced by local governments during the 2024 medium-term expenditure framework (MTEF) period, where only 9,8% of nationally raised funds were allocated to municipalities. The Treasury emphasised the importance of innovative financing solutions, such as blended and alternative finance, which can help municipalities access additional capital while reducing borrowing costs and sharing risks. Highlighting the Western Cape government's investment in regional waste management facilities, the Treasury remarked: “The Western Cape province has invested in new regional waste management facilities,” underscoring the significance of innovative funding strategies for sustaining municipal infrastructure projects.