Dr. Zweli Mkhize, Chairperson of Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs, says government is concerned by the rise in municipal debts nationwide.
Last week, the Standing Committee on Public Accounts reported that municipalities collectively owe Eskom R94 billion.
Speaking at a parliamentary briefing on Monday, Mkhize singled out the troubled Maluti-a-Phofung Municipality in the Free State as one of the worst offenders, owing Eskom R9 billion.
“This poses a serious threat to the utility’s sustainability,” Mkhize said.
He further disclosed that the Maluti-a-Phofung Local Municipality is currently bankrupt, operating with a deficit of R1.5 billion, a situation projected to take 20 years to rectify.
“The Mangaung Metro and the City of Tshwane are among the only two out of 74 municipalities whose financial positions were so dire that significant doubt was cast on their ability to continue operations,” Mkhize noted.
“Mangaung Metro has been under national intervention since April 2022 under Section 139(7) of the Constitution, a status it has held for over five years.”
Mkhize emphasised that in the latest Auditor-General’s report on municipalities, none in the Free State received a clean audit.
“The challenges in municipal finances are widespread,” Mkhize concluded, highlighting ongoing issues flagged by the Auditor-General in outstanding audits for the 2023/24 financial year.
Of the nine municipalities with pending audits, six are in the Free State, with one each in the Northern Cape, KwaZulu-Natal, and the North West.
“This late submission or failure to submit annual financial statements is concerning, but so is the quality of these statements when they are submitted, and this compounds the already dire financial situation at these municipalities,” said Mkhize.
He added that he was also concerned by the number of government departments and households owing municipalities hundreds of millions for services rendered.
In Mangaung, for example, the committee heard that almost R40 billion is owed to municipalities, with households constituting 73% of that debt.
In turn, municipalities in the Free State owe Eskom and the water boards billions, with several municipalities defaulting on the debt relief programme.
“This arrangement was to help struggling municipalities with their Eskom debt, but many of them are defaulting. This is linked to municipalities’ inability to raise their own revenue,” said Mkhize.
“The committee also heard that most of the province’s municipalities cannot pay their financial obligations, and most of the proposed budgets are unfunded, meaning there is no money to implement the budget projects.”
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