President Cyril Ramaphosa delivering opening remarks during an engagement between the National Executive and the Provincial Executive Council held at the University of Free State.

• President Cyril Ramaphosa acknowledged a crisis in South Africa’s local government, citing poor governance, financial mismanagement, and corruption as key issues.
• Thirty-five of 257 municipalities are distressed, with 63% at risk; steps include reviewing funding models and improving water and electricity services, Ramaphosa told a meeting between the national and Free State executives.
• Free State Premier MaQueen Letsoha-Mathae highlighted unemployment and aims to boost the economy via AI, renewable energy, and agro-processing.

Local government is in crisis, President Cyril Ramaphosa admitted on Friday morning when the national executive met with the Free State provincial executive council.

“When local government is effective, capacitated, and professional, service delivery is improved. With effective financial management and strong, accountable leadership in local government, we are responsive to the needs of citizens and enjoy their trust,” Ramaphosa said in his opening remarks to the meeting.

“When there are weaknesses or failings at local government, it isn’t just service delivery that suffers, but the trust between government and citizens becomes frayed.”

He said: “To put it quite bluntly, across much if not most of the country, local government is in crisis.”

According to Ramaphosa, as of 2025, 35 of South Africa’s 257 municipalities were classified as distressed, and approximately 63% were classified as being at risk.

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He said the number of municipalities placed under administration, including in the Free State, is growing.

“Underfunding, lack of capacity, high debt, and struggling revenue generation models are just some of the challenges. At the same time, many municipalities are practically paralysed by poor governance, financial mismanagement and corruption.”

Ramaphosa said in his State of the Nation Address last month he outlined the steps that government would take to strengthen municipalities, including reviewing the funding model for municipalities and establishing ring-fenced utilities for water and electricity services.

“We will also be undertaking extensive consultations around the updated White Paper on Local Government during the course of this year.”

Ramaphosa added:

According to Ramaphosa, the Free State is “uniquely positioned to be at the heart of our country’s economic growth story”.

“It is strategically located, making it a natural logistics and distribution hub linking major economic centres.

“The province has extensive agricultural capacity, contributes significantly to our nation’s food security, and has a growing agro-processing sector.

“Mining is well-established here, with increasing opportunities in manufacturing and beneficiation. The province is also leveraging its natural resources to generate renewable energy and for battery storage.”

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Free State Premier MaQueen Letsoha-Mathae said her province faced profound structural challenges that require deliberate and coordinated intervention.

“Unemployment remains the most immediate and pressing crisis confronting our province. Over 1 million of our people remain without work, with young people bearing the greatest burden. The reality of youth exclusion from economic participation is not only unsustainable, it is a direct threat to social stability and long-term development,” she said.

She said the provincial government was actively repositioning its economy towards sectors that could unlock inclusive growth and sustainable employment, like artificial intelligence and robotics, renewable energy and green hydrogen, natural gas development, agro-processing and food production, the digital economy, e-commerce, and entrepreneurship.

“Our focus is on building a competitive, future-oriented provincial economy that delivers real opportunities for our people,” said Letsoha-Mathae.

“At the same time, we recognise that economic reform must be accompanied by decisive action to address persistent social challenges, including crime, substance abuse, and inequality. These issues require an integrated, whole-of-government response that is both coordinated and results-driven.”