The local government sphere is in turmoil in South Africa. This is a familiar phrase that is difficult to refute, not only because of the situation in many communities but also because it has been reported by the Auditor-General of South Africa in recent years. The 2019–2020 municipal audit results indicated that only 10% of municipalities managed to get a clean audit, while more than a quarter were in doubt as going concerns, and nearly a third ended the financial year running on a deficit (Maluleke 2022). As such, financial mismanagement has a negative impact on service delivery in South Africa and, in most cases, leads to violent service delivery protests.

In South Africa, metropolitan municipalities have financial autonomy and they report their financial affairs to the National Treasury as compared to local municipalities and district municipalities who report to the relevant Provincial Treasuries. Metropolitan municipalities are classified as category A municipalities. Currently, there are eight metropolitan municipalities (Buffalo City; City of Cape Town; City of Johannesburg; City of eThekwini; Nelson Mandela Metropolitan Municipality; City of Tshwane; Ekurhuleni Municipality and Mangaung Municipality). Thus, the focus and locus will be on metropolitan municipalities in Gauteng province.

The revenue streams of these municipalities have been under pressure since the 2018–2019 financial year to date as the slower economy affects households and increases debtor collection days (Maluleke 2022). Maluleke (2022) further adds that in most metropolitan municipalities in Gauteng, the high unemployment rate within communities has also contributed to the lower collection of revenue from service charges. These municipalities need to implement stringent credit control measures and revenue enhancement strategies, and alternative revenue streams are critical.

Only the City of Ekurhuleni received an unqualified audit with no findings (clean audit) in Gauteng in the past 3 years (2018–2019 till 2020–2021). However, the municipality has since lost its clean status in the last financial year of 2021–2022. Ekurhuleni municipality underspent by 81.4% on its operating budget in the 2021–2022 financial year (Municipal Money 2023). Furthermore, the metropolitan municipality had a −R13 533 919 038.00 cash balance at the end of the 2021–2022 financial year.

The City of Tshwane and the City of Johannesburg regressed to adverse and disclaimed audit opinions respectively and had material irregularities in the 2021–2022 fiscal year as a result of non-compliance with procurement processes, assets of the municipality not safeguarded, revenue not billed and suspected fraud (Maluleke 2022). However, the City of Johannesburg had a positive cash balance of R4 722 549 104.00 at the end of 2021–2022 financial year; this means operating expenses can be paid for with the cash available for 5.2 months, the operating budget was underspent by 82.9%.

Several studies have been conducted on political coalitions in local government in South Africa regarding service delivery in metropolitan municipalities (Hanabe & Malinzi 2019; Joshua, James & Titos 2022; Mokgosi, Shai & Ogunnubi 2017). Some studies have looked at the policy, administrative and legislative framework of these coalitions (Munzhedzi 2020; Nzimakwe 2022; Olver 2021).

These studies did not look at the financial and service delivery performance of metropolitan municipalities. Furthermore, some of these studies used different methods to answer the issues related to service delivery. However, most researchers agree that political coalitions in metropolitan municipalities are not stable and, as such, service delivery is compromised.

The results of the sixth local elections, held on 21 November 2021, were as follows: African National Congress (ANC) (47.9%), Democratic Alliance (DA) (20.0%), Economic Freedom Fighters (EFF) (10.6%), Inkatha Freedom Party (IFP) (6.3%), VryheidsFront Plus (VF Plus) (2.3%), Action SA (1.8%) and Independent Candidates (IND) (1.3%) (Independent Electoral Commission 2021). With the increase in hung municipal councils from 27 in 2016 to 66 in 2021, political parties formed political coalitions to run councils and pass budgets, particularly in metropolitan municipalities. However, most of these political parties are far apart ideologically. As such, political turmoil and conflict between the political and management components of the South African local government have also harmed service delivery (Reddy 2019:1). Therefore, it is critical to assess the state of service delivery and financial performance under these political coalitions.

In terms of service delivery, Figure 1 shows the number of violent service delivery protests in municipalities on a year-to-year basis from 2004 to 2022. These protests create high levels of dysfunction and governance challenges in municipalities. The functioning of municipalities is worsening, and residents no longer have confidence in the governing party.

Figure 1 shows that many South African communities are dissatisfied with the services provided by municipalities, particularly between the first political coalition era in 2016, and subsequently in 2022. When residents do not receive what they are required to receive from the government, especially from municipalities, as specified in the Constitution, they usually express their dissatisfaction through protests. Therefore, service delivery remains a major concern in South Africa, particularly under political coalition governments. Figure 2 shows the civil unrest in South Africa.

According to Figure 2, metropolitan municipalities had the most civil unrest in the country. KwaZulu-Natal recorded 62% of these unrests, whereas Gauteng recorded 38%. Figure 3 shows the actual location of these protests.

Although the metropolitan municipality of eThekwini had the highest number of incidents, the focus of this study is on the metropolitan municipalities in Gauteng province.

With the introduction and signing of the 1996 Constitution of the Republic of South Africa (RSA) after the first democratic elections in April 1994, this document became the supreme law (legal framework) of the Republic. This legal framework guides the government in the delivery of services and in their efforts to eradicate poverty (Koma 2010:111).

Section 151 of the Constitution defines the goals of municipal government, which are to provide services to citizens in a suitable way, to maintain social and economic growth, stimulate health, and ensure that communities live in a safe environment (Republic of South Africa 1996). The Constitution was formulated with the intention of democratising the republic and eradicating the inequalities attributed to the previous apartheid regime so as to raise the standard of living of all South Africans and allow them to enjoy equal rights. Figure 4 illustrates the role of the Republic’s Constitution in framing these rights.

It is evident from the roles included in Figure 4 that the goal is to create a governance and value-based structure for residents to receive services. The Constitution also mandates the government to utilise public resources in an efficient and effective manner, and further it emphasises the importance of holding various government institutions, particularly local government, to be accountable to the people.

Section 11(3) of the Local Government: Municipal Systems Act 32 of 2000 (RSA 2000) provides that ‘A municipality exercises its legislative or executive authority by:

The objective of this study was to evaluate the effects of political coalitions on the financial and service delivery performance in selected metropolitan municipalities in Gauteng province. The selected municipalities are the City of Tshwane, the City of Johannesburg and the City of Ekurhuleni. The rationale for selecting these metropolitan municipalities is the political instability in them and the infighting between the coalition partners. This affects the operation of these municipalities and has a potential effect on the delivery of services and financial performance. The study focusses on the coalition period in the 2020–2021 and 2021–2022 financial years. These municipalities were governed by coalition agreements before the 2021 election cycle; hence, the study included the fiscal year 2020–2021 to assess how they performed in the last financial year of the previous voting cycle (2016 to 2021).

The study used a qualitative research approach with secondary data to answer the research question, which was to evaluate the financial and service delivery performance of the metropolitan municipalities of Gauteng province. In relation to service delivery, the study used documentary and literature reviews, and for the financial analysis component, secondary data were obtained from the audited financial statements of these municipalities to calculate financial ratios to evaluate their financial performance in the 2020–2021 and 2021–2022 financial years. Furthermore, the study used a multiple case study approach. Vohra (2014) defines a multiple case study as an in-depth examination of occurrences of a phenomenon in its natural setting and from the viewpoint of the phenomenon’s participants in multiple organisations. Gustafsson (2017) defines a multiple case study as an in-depth investigation of persons, a group of people or units with the intention of generalising over various units.

According to Gustafsson (2017), a multiple case study is a popular approach among researchers in the social sciences. A multiple case study differs from a single case study in that the researcher examines several cases to understand the differences and similarities between them (Gustafsson 2017; Zieba, Bolisani & Scarso 2016). Using a multiple case study technique, the researchers were able to investigate the financial and service delivery performance of three metropolitan municipalities in Gauteng province by broadening the investigation of the research question. Multiple case studies enabled the researchers to compare the results of three separate cases.

In relation to the current ratios, metropolitan municipalities in Gauteng show a net current liability position (total current liabilities exceed total current assets), which affects the municipality’s capacity to pay creditors within 30 days. Between 2018 and 2020, these metropolitan municipalities performed above the required norm of a 1.5–2:1 threshold. However, the performance declined from 2020–2021 to 2021–2022 fiscal years as some municipalities performed below the norm. Thus, there is a concerning trend in the current ratio of these metropolitan municipalities in Gauteng, which signals the inability of these municipalities to cover their short-term obligations. These municipalities are financially constrained and cannot afford to fulfil their short-term liabilities using their short-term cash and cash equivalents. It is important for organisations, including those in the public sector, to maintain acceptable levels of liquidity (Els et al., 2014).

The municipalities’ collection rate is lower than the norm of 95%, indicating that they are not collecting money for the services they are meant to deliver. As a result, the cash flow of these municipalities is significantly impacted, which has a direct influence on their long-term survival. The City of Tshwane has experienced an improvement in collection rates in the 2020–2021 financial year; however, the collection rate declined in 2021–2022 by 9%, which is not a good indicator for the municipality.

Regarding the solvency ratios, Gauteng’s metropolitan municipalities realised an overall net asset position. This ratio was calculated to evaluate the municipalities’ ability to pay back their long-term liabilities with their long-term assets. This indicates that the metropolitan municipalities can adequately sustain operations in future.

In order to understand the financial viability of a municipality, a solvency ratio is one of the most important ratios used by different stakeholders to identify the underutilisation of resources that increase affordability over time. The solvency ratio provides a comprehensive understanding of a municipality’s solvency and its ability to generate enough cash to pay off its commitment. The municipality is deemed to be financially strong if the value of its total assets is higher than the value of its total liabilities. Liabilities, in most cases, mean the debt the municipality has taken for running its operations. The study presents a positive picture; however, political instability continues to be a threat to the wellbeing of the municipalities as demonstrated by poor governance.

The political coalition agreements between the political parties in these metropolitan municipalities are broken, which results in poor governance in these municipalities. In South Africa’s metropolitan municipalities, especially in Gauteng province, there is no longer a dominating political party, with support for the ANC falling to less than 50% in the 2021 local government elections. Understanding many essential elements of South African municipal coalitions requires an awareness of the political and ideological divides. The country’s 1996 Constitution, which envisions a society that belongs to those who live in it, unified in their diversity, serves as the conceptual and political cornerstone of the ‘rainbow nation’ movement. This important aspect lowers the social tension in several ways.

These conflicts stem from the administrative and political realities, power politics that are visible at every organisational and sectoral level and an almost total lack of ideology among all parties, who are the main characters in a plot of deceit, backstabbing and intrigue. In terms of the financial performance of the three metropolitan municipalities, the following trends were revealed: ratios such as debtors’ collection rate of the City of Johannesburg (74% and 78%) and the City of Ekurhuleni performed (75% and 70%) below the norm (95%) in fiscal years 2020–2021 and 2021–2022, while the performance of the City of Tshwane declined by 9% from fiscal years 2020–2021. In relation to the current ratios, all the metros did not perform well with the City of Johannesburg achieving 0.98 in 2021–2022 and 1.16 in 2020–2021. While the City of Ekurhuleni obtained 0.87 in 2021–2022 and 0.84 in 2020–2021, and the City of Tshwane obtained 0.54 in 2021–2022 and 0.69 in 2020–2021. All these metropolitan municipalities performed below the norm of 1.5:2:1. This result indicates the inability of the municipalities to meet their short-term financial obligations with the short-term assets. Whereas, in terms of the solvency ratios, Gauteng’s metropolitan municipalities realised an overall net asset position.

In relation to service delivery, the City of Johannesburg faces issues in delivering water and sanitation services through its agency Rand Water, and this phenomenon has been happening since the 2020–2021 financial year (Bikam & Chakwizira 2021) and this is caused by ageing water infrastructure. Furthermore, the water crisis has also extended to other metropolitan municipalities and includes unemployment, poverty, poor infrastructure and housing shortages. Admittedly, housing is an extremely required service in urban areas because of immigration and the growth of informal settlements in Gauteng; however, many people still live in poverty without a roof over their heads. Similarly, the primary healthcare system in Gauteng, as well as throughout the country, has been adversely affected by various challenges. These challenges include poor governance, ineffective resource mobilisation and the coronavirus disease 2019 (COVID-19) pandemic in 2020–2021. These factors have significantly impacted the quality of healthcare services (Maphumulo & Bhengu 2019:1).