The Bela-Bela municipality in Limpopo is so poor it cannot buy or build offices for itself.
More than a year has passed since the municipality's offices mysteriously burnt down, but nothing has been done to get a permanent home for it because it is running on overdraft.
Plans to borrow money from a bank are at an advanced stage.
The building was gutted on October 5 2005 and since then the municipality has had to rent offices.
Superintendent Malesela Ledwaba, a police spokesman in the Waterberg area, said they were still investigating a case of arson and that no one had been arrested.
Mayor Henrietta Ledwaba said: "We have applied for a loan from a bank and we expect a response from them soon," she said.
She said they had also made a recommendation to the Department of Provincial and Local Government with a view to getting help, but they were worried because the process was taking so long.
"We are hoping to get the loan from the bank so that we can move forward," she said.
"Having to serve the people in our district while operating out of other people's buildings is hampering our progress.
"However, we didn't choose to be in this situation. The municipality has run out of funds and is totally dependent on an overdraft from the bank," she said.
The municipality has been under tremendous pressure lately, with residents calling for Ledwaba's resignation.
They accuse her of incompetence, saying services have collapsed since her appointment.
But Ledwaba blames the residents, saying they are not paying their municipal accounts.
"The fact that residents are not paying for services affects all our services and it is impossible to run the municipality efficiently when they don't pay," she said.
"We call on residents to pay their accounts if they really want to receive the services that they are demanding."