By As things stands, according to the Minister of Finance Mr Enoch Godongwana, there are about 50 municipalities out of 257 in the country that have active financial recovery plans.
Godongwana painted rather a bleak picture during his Mid-Term Policy Statement (MTPS) on Wednesday, 30 October 2024; of municipalities in the country, reflective of serious challenges in management or governance, service delivery and some drowning in debt.
The Minister said local government in South Africa play a vital role in building a capable state that fosters economic growth and responds to societal needs.
“Sadly, many of our municipalities face serious governance, planning and financial management challenges. As things stand, 50 of the 257 municipalities in the country have active financial recovery plans. Three municipalities are under national intervention and these are Mangaung, Enoch Mgijima and Lekwa.
This situation is untenable,” said Minister Enoch Godongwana.
He said the reality is that national government cannot intervene in all municipalities at the same time.
The Minister pointed out that there are several initiatives underway to help remedy the situation in municipalities; this includes the Eskom municipal debt relief programme.
“Since February when we last reported on the relief programme, around 70 of the municipalities that had applied for debt relief have been approved. Between March and August 2024, compliance with relief conditions by municipalities improved from 55 percent to 76 percent, aided by the National Treasury, Provincial Treasuries, and the Municipal Finance Improvement Programme.
Rand West City is the first municipality to benefit from a one-third debt write-off. This follows its substantial achievement of the debt-relief conditions for the first 12-month cycle. More municipalities stand to benefit from this write-off of debt if they comply with the conditions of the programme,” said Godongwana.
Some of the problems that municipalities are faced with emanate from provincial and national government departments who do not pay their bills, to this, Enoch Godongwana appealed to the departments to pay their dues as it will enable municipalities to pay water boards and Eskom so that they can in turn deliver services to citizens.
Minister Godongwana further said that metros will be repositioned into economic hubs that can generate a surplus for themselves, as a majority of citizens in South Africa reside in metros; according to the Minister, almost 60 percent of economic activity is concentrated in the eight metropolitan municipalities that are home to 6 out of 10 people in South Africa.
“To turn things around in municipal service provision, the reforms in trading services focuses on financial, institutional and management changes in metros. The goal is to improve outcomes and enable them to generate surpluses to increase investment in infrastructure.
Our efforts are supportive of the intent of the White Paper on Local Government by the Department of Cooperative Governance to reimagine municipalities as transformative vehicles equipped to respond to the needs of residents,” he said.
