In an unprecedented move, the National Treasury has decided to withhold billions in equitable share transfers to 70 municipalities, citing financial mismanagement and non-compliance with the Municipal Finance Management Act (MFMA). Despite attempts at training and offering support, the abuse of state coffers has gone on unabated — hence Finance Minister Enoch Godongwana has finally dropped the gauntlet.
‘[Municipalities]’ said Godongwana at a media briefing, ‘are the custodians of community welfare, the engines of local economies, and the guardians of social stability. As such, the financial conduct of municipalities has far reaching socio-economic importance.’
In what he described as an ‘extraordinary but necessary’ decision, the minister expressed that his move was not intended to be punitive but corrective.
He went on to say that, despite persistent government interventions, municipalities continued to:
- Adopt unfunded budgets;
- Incur unauthorised, irregular, fruitless and wasteful expenditure (UIFWE); and
- Fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.
This has resulted in the following:
- Since 2021–22, municipalities have incurred R24.12 billion in fruitless and wasteful expenditure.
- They have accumulated R145.21 billion in irregular expenditure, with R40.14 billion in 2024–25 alone.
- They have disclosed R118.13 billion in unauthorised expenditure, more than half of which was on non-cash budget items.
- Budget credibility has deteriorated: in 2024–25, 116 municipalities (nearly half) adopted unfunded budgets.
- By year-end, municipalities owed R3.40 billion in interest to Eskom, and R1.21 billion to water boards, while 48 municipalities had overdue third-party deductions.
These measures not only affect metros like Mangaung and Buffalo City. but smaller municipalities as well – including Colesberg’s very own Umsobomvu Local Municipality.
Umsobomvu has since released a statement annnouncing that after working ‘diligently’ with the National Treasury, and addressing all the matters that had been raised regarding compliance with the provisions of the Municipal Finance Management Act, the Treasury had released its equitable share allocation.
The response from pundits has generally been to ask: ‘Why did it have to take so long?’ As previously written, many of the country’s municipalities have been clocking horrendous audits year on year without any consequence or accountability, effectively entrenching a culture of impunity and treating state funds as a bottomless feeding trough for the connected. The message was unequivocal: here, you could casually dabble in all manner of financial mismanagement (read: corruption) and not only get away with it, but enjoy a brazen kind of self-enrichment.
Writing in Daily Maverick , the noted journalist and commentator Mondli Makhanya mentions the case of Lindiwe Msengana-Ndlela, a seasoned public servant roped in to clean up the embattled Nelson Mandela Bay (NMB) municipality in the 2010s. Her commitment to fighting corruption and how she sought to reverse the systemic rot and malpractice within the municipality would ultimately see her pushed out of her municipal manager role.
Party politics and avarice seemed to override the cardinal responsibility of faithfully serving the people of the metro. Msengana-Ndlela subsequently sued the metro for unfair dismissal, and won more than R3,1 million in damages. Despite costly attempts to stall the judicial process, the municipality did not even attempt to refute her allegations.
At R30-billion, NMB has the highest rate of wasteful spending in the entire country, combined with a low collection rate and high levels of unauthorised, irregular, fruitless and wasteful expenditure. Therefore, it should not surprise anyone that, in response to Treasury’s decision, it has been first to complain.
Similar examples are everywhere — some of the most scandalous are currently being laid bare to an incredulous audience at the Madlanga Commission. It is terrible – in fact, utterly shameful — to watch just how deeply embedded the misgovernance and incompetence has become. The testimonies by individuals who have been put in charge of vast sums of public money has been a wake-up call for South Africans, to seriously think about who they will be voting for in the upcoming local government elections.
Eaerlier this week, the Eastern Cape Premier, Oscar Mabuyane, held a meeting with six mayors of affected municipalities to present their action plans in this regard. ‘As the provincial government,’ said Mabuyane, ‘we cannot allow a situation where our people bear the consequences of governance and compliance shortcomings through disruptions in basic service delivery.’
Of course, the stinging irony here is that the residents of Buffalo City, for example, have been squirming under woeful governance and pitiful service delivery for years, as Parliament’s Standing Committee on Public Accounts has been hearing. The Economic Freedom Fighters (EFF) have been among those who have opposed Treasury’s decision on the grounds that this would pose a grave threat to remaining service delivery.
Although the party accepts that ‘our municipalities have either collapsed or are on the brink of collapse, with service delivery breaking down, and basic infrastructure left to decay’, they maintain that ‘the solution is not to withhold monies that must deliver services to our people. Municipalities have failed our people, and now the National Treasury is doing the same.’
While Treasury’s initiative seems to make sense, it fails to address the elephant in the room namely how to ensure that municipalities do their job, and that there are consequences when they don’t. This is one of those instances where a hard decision must be taken, if for no other reason that to show those who would seek to plunder state resources that big brother is watching.
All across South Africa, we see municipalities collapsing, critical infrastructure failing, and once glorious towns sliding into decrepitude. RDP houses go unfinished, facilities go unused, sewerage and water services collapse, and the public can do nothing except complain on social media.
Perhaps Mondli Makhanya has expressed it best: ‘It was the state of emergency that South Africa’s local government system has long needed. An ice-cold bucket of water that a family matriarch throws at a hungover husband or son, to force them to wake up and go to work … a long-overdue rebuke for municipalities which have long been chastised by the Auditor-General and other arms of government but have remained stubbornly delinquent’.
He also doesn’t pull his punches about what he thinks should happen next: ‘Treasury’s declaration of a state of emergency is only just the beginning. It is an effective administrative tool, but the more difficult bit will be to root out the culture of rot. That might need some kind of martial law, whatever form that takes.’
FEATURED IMAGE: The building housing Colesberg’s Umsobomvu Local Municipality. Source: eParkeni.