Local government is notorious for the headlines it generates. But a look beyond these reveals how some of the country’s 234 municipalities are poised for take-off.

After applying financial and non-financial indices from Government reports, business organisations and financial intelligence agencies, Finweek has whittled down a list of candidate municipalities to 10 that aren’t only business friendly but show the greatest potential for growth and opportunity. These score well in a combination of gauges, including impressive economic growth levels, budgets for economic development, geographical positioning, large populations and tailor-made business incentive packages.

Data difficulties

Selecting 10 top municipalities, however, is not without complication and contradiction. For a start there’s no primary, comparative research data. There are also many variables that could be applied and each variable would mean different things to different kinds of businesses.

The annual audits on municipalities of Auditor-General (AG) Terence Nombembe are a good place to start, as they give insight into how public finances are managed. But there’s not necessarily any correlation between the audit findings and the business opportunities in the area or how business friendly the local authority is. Buffalo City in the Eastern Cape is a prime example. The newly proclaimed metropolitan government not only received a disclaimer audit in the last financial year, but Mayor Zukiswa Faku, who has a questionable political career that’s been dogged by allegations of corruption, has been re-elected.

Buffalo City’s indicators, however, suggest that Buffalo City’s incentive schemes and industrial expansion offer opportunity for businesses looking to get in on areas with investment and growth potential.

Any comparative exercise of municipalities will also obviously always see the big four metropolitan governments, Johannesburg, Ethekwini, Tshwane and Cape Town rise to the top. Finweek deliberately left the big four off the list to focus on up-and-coming places to do business. It’s interesting, however, to compare the big four’s vital stats.

The top 10:

1. Mossel Bay (Western Cape)

2. Rustenburg (North West)

3. Msunduzi (KwaZula Natal)

4. uMhlathuze (KwaZulu Natal)

5. Emfuleni (Gauteng)

6. George (Western Cape)

7. Buffalo City (Eastern Cape)

8. Mbombela (Mpumalanga)

9. Polokwane (Limpopo)

10. Mangaung (Free State)

To see the complete breakdown of the top 10 get the full story here, or in the latest Finweek.

The Big Four – how they compare

1. City of Johannesburg

MPI: 78
Population: 3 669 468 or 7.37% of SA total
Percentage of national GDP it generates: 16.7%
Economic growth rate: 3.4% (4.2%, 1996 to 2010)
How much of its own revenue municipality generates: 70%
Municipality spend on each citizen/year: R6 205
Average annual personal income: R65 382
Audit: Qualified

2. City of Cape Town

MPI: 73.8
Population 3 268 975 or 5.77% of SA total
Percentage of national GDP it generates: 11.18%
Economic growth rate: 3.6%
How much of its own revenue municipality generates: 64%
Municipality spend on each citizen/year: R5 757
Total personal annual income: R239bn or an average of R65 382/person
Audit: Eight consecutive unqualified audits

3. eThekwini Metro (Durban)

MPI: 74.4
Population: 3 467 302 or 6.96% of SA total
Percentage of national GDP it generates: 10.71%
Economic growth rate: 3.5%
How much of its own revenue municipality generates: 79%
Municipality spend on each citizen/year: R4 601
Average annual personal income: R45 967
Audit: Unqualified.

4. City of Tshwane

MPI: 72.7
Population: 2 480 227 or 4.98% of SA total
Percentage of national GDP it generates: 10.03%
Economic growth rate: 4.6% (1996 to 2010)
How much of its own revenue municipality generates: 75%
Municipality spend on each citizen/year: R5 919
Average annual personal income: R72 491
Audit: Unqualified with findings

Source:  FinWeek