Economic Freedom Fighters (EFF)
By Thobeka Makume
The Economic Freedom Fighters (EFF) have formally called for a significant increase in the local government allocation within the 2025 Division of Revenue Bill, proposing a rise from the current 9.5% to 14% of non-interest expenditure. This proposal aims to address the fiscal challenges faced by municipalities, particularly those in rural and under-resourced areas.
EFF’s Submission to the Standing Committee on Appropriations
On Tuesday, 22 April 2025, EFF national spokesperson Sinawo Thambo announced the party’s detailed submission to the Standing Committee on Appropriations. The EFF welcomed the committee’s decision to postpone the adoption of the 2025 Division of Revenue Bill, allowing for further consideration of proposed amendments.
“We made detailed and substantive submissions to the committee, calling for amendments to the Bill,” said Thambo. “Our proposals were grounded in the realities of fiscal injustices at the local government level and aimed to initiate a process to restructure the distribution of revenue raised nationally to ensure progressive steps towards building people’s municipalities and local economic development.”
Rationale Behind the Proposed Increase
The EFF’s proposal to increase the local government allocation to 14% is based on several key points:
1. Outdated Equitable Share Formula: The current formula relies on data from the 2010 Income and Expenditure Survey, which underestimates the number of indigent households. This has led to insufficient funding for municipalities struggling to provide basic services.
2. Revenue Generation Challenges: Many municipalities, especially in rural areas, cannot generate sufficient revenue through rates and service charges. The EFF argues that expecting municipalities to operate as profit-driven entities is unrealistic and undermines their ability to serve communities effectively.
3. Reprioritisation of Existing Expenditure: The proposed increase does not require new borrowing but suggests reallocating funds from non-essential programmes, reducing administrative overheads, and cutting excessive consultancy budgets. The EFF highlights that over R190 billion in irregular expenditure was flagged by the Auditor-General in the last three years.
4. Enhancing Service Delivery: Additional funds would be directed towards insourcing recurring services such as waste collection, cleaning, and maintenance, thereby rebuilding the internal capacity of municipalities and reducing dependence on external contractors.
Committee’s Response and Next Steps
The Standing Committee on Appropriations has referred the EFF’s proposal to the Parliamentary Budget Office (PBO), the Financial and Fiscal Commission (FFC), and the Minister of Finance for assessment. The committee is expected to finalise its report to the National Assembly by 6 May 2025.
Thambo expressed confidence in the outcome, stating, “We are confident that the outcome will take us in the correct direction towards a revision of the equitable share formula within the current legislation.”
Broader Implications for Local Government
The EFF’s proposal underscores the need for a more equitable distribution of national revenue to empower local governments. By increasing the allocation to municipalities, the party aims to address service delivery backlogs, improve infrastructure, and stimulate local economic development.
The call for increased funding aligns with the constitutional mandate for equitable sharing of revenue among the national, provincial, and local spheres of government. It also resonates with the broader discourse on fiscal decentralisation and the need to strengthen local governance structures. 
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