A total of 75 municipalities nationwide are at risk of not receiving the tranche of their equitable share payable this month due to alleged financial mismanagement.
Municipalities rely heavily on these government transfers for critical functions, especially in an environment where they are struggling to collect money owed to them by consumers, businesses and even government departments.
According to the South African Local Government Association (Salga), several municipalities say their payments have been withheld by National Treasury.
It is unclear how many of the 75 that received warnings have seen National Treasury proceed with this punitive step.
Moneyweb has asked for a list of the affected municipalities, but has not yet received an answer.
Salga, which represents 257 municipalities nationwide, has questioned the process followed by National Treasury in arriving at this decision.
It said in a statement that Treasury has, since September, warned twice in circulars that it would take this step. In response, Salga attempted to engage with Treasury so it could help municipalities mitigate the risk and rectify their affairs.
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“Despite Salga’s repeated attempts, [National Treasury] did not cooperate,” the organisation says in a statement.
“This constrained Salga’s ability to assist municipalities with their compliance challenges and to prevent their funds from being withheld.”
Salga says there are several shortcomings in the process followed by National Treasury:
- Communication with the affected municipalities was inconsistent, and it was often unclear what was expected of them;
- In several cases, Treasury did not clearly indicate the deadline; and
- Where municipalities did make submissions, they received no feedback and the funds were simply withheld.
Payments to municipalities that did comply, and whose responses were acceptable, must be made immediately, Salga says.
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What should happen now, according to Salga
The organisation has called for a formal, transparent and time-bound process within the framework of the Division of Revenue Act before funds are withheld.
It further calls for structured engagements through intergovernmental platforms to strengthen oversight and coordination.
Salga also urges National Treasury not to act against municipalities only, but to also withhold allocations from the fiscus to state departments that fail to pay their municipal accounts.
“This is essential to ensure fairness and accountability.”
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What Salga should note, according to the DA
“The municipalities in question have failed to pay their water boards, Eskom, pension funds and Sars [SA Revenue Service],” DA spokesperson on local government Marina van Zyl.
“This is gross financial mismanagement and Salga should be addressing these matters with their members rather than attacking the Treasury for fulfilling a constitutional obligation.”
Van Zyl says Salga “was dead quiet when the municipalities’ failures to pay water boards last year almost resulted in the bankruptcy of two water boards, which would have left millions of people without clean water”.
“There are huge issues with corruption and financial mismanagement in these municipalities, and they must be addressed head on, and Salga needs to act less like a shop steward and more like a responsible government entity.”
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Catch-22
The African People’s Convention (APC) says it is deeply concerned about the withholding of grants to 15 municipalities in North West province.
This number could net yet be confirmed.
It says National Treasury took the step due to financial mismanagement by the affected municipalities – including unpaid debts, failure to submit council-approved funded budgets, as well as continued irregular, fruitless and wasteful expenditure.
The party says that while it supports decisive action against corruption, mismanagement and financial recklessness, it is “deeply concerned about the direct impact this decision will have on ordinary communities”.
According to the APC, these funds are intended to ensure the delivery of basic services, pay municipal workers and provide support to indigent households.
“Freezing these funds, without urgent corrective support and oversight risks further collapsing already fragile municipalities and punishing communities for failures they did not cause.”
The APC calls for those responsible for the looting of public resources to be held personally accountable and to face criminal prosecution where applicable.
This article was republished from Moneyweb. Read the original here.
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