FEASIBILITY OF SALGA AS A LOCAL GOVERNMENT FINANCING AGENCY FOR SUPPORTING MUNICIPAL JUST ENERGY TRANSITION IMPLEMENTATION PLANS IN SOUTH AFRICA

Abstract

This paper explores the feasibility of the South African Local Government Association (SALGA) establishing a local government funding agency (LGFA) to support municipalities in implementing the Just Energy Transition Implementation Plan (JETIP). The study responds to declining intergovernmental grants and rising infrastructure financing needs for sustainable investments. Using qualitative methods, it analyses annual reports from LGFAs in various regions and draws on a narrative literature review to identify success factors such as institutional performance, governance, credit ratings, and sustainability initiatives. Findings show that LGFAs globally have improved municipal access to capital markets, lowered borrowing costs, and supported climate-aligned infrastructure. However, challenges specific to South African municipalities—such as weak institutional capacity and fiscal imbalances—could limit successful LGFA implementation. SALGA’s role in advocacy, governance support, and stakeholder engagement is critical to overcoming these barriers. The study is limited by its reliance on secondary data, which may not fully reflect local dynamics. Future research should include local case studies and stakeholder surveys to assess municipal demand for an LGFA. Key recommendations include developing pooled financing mechanisms, building capacity for project preparation, and aligning LGFA design with climate finance frameworks. By tailoring the LGFA model to South Africa’s unique context, SALGA can help catalyse green infrastructure investment and strengthen municipal financial resilience. This paper contributes to debates on sustainable municipal finance and offers a strategic pathway for enabling municipalities to participate meaningfully in the country’s energy transition.