The Overberg usually boasts two top municipalities that regularly win awards, but this year Theewaterskloof Municipality (TWK) walked away with its tail between its legs.
The Auditor-General’s damning national report on local government has put the spotlight on TWK, which again received a qualified audit opinion for the 2024-’25 financial year and remains among the Western Cape’s most financially distressed municipalities.
Auditor-General Tsakani Maluleke tabled the Consolidated General Report on Local Government Audit Outcomes for 2024-’25 in Parliament on 24 June, revealing that 62 municipalities nationally were in severe financial distress. TWK was listed among them, flagged as carrying going-concern uncertainty, meaning there are serious doubts about whether the municipality can continue to operate.
TWK’s decline has been rapid. As recently as 2022-’23 the municipality collected over 95% of planned revenue and closed the year with a surplus. By August 2024 revenue collection had collapsed to 64% – well below the National Treasury benchmark – as governance instability and unchecked spending took hold. The municipality has now recorded a going-concern uncertainty for at least one consecutive year, with its audit outcome regressing from unqualified to qualified between 2022-’23 and 2023-’24, a slide that continued through 2024-’25.
The Western Cape Provincial Treasury has classified TWK as one of five municipalities in the province requiring intensified financial support. In November last year the MEC for Local Government invoked Section 139 of the Constitution, placing the municipality under financial administration. The Western Cape Government subsequently approved a Financial Recovery Plan in October, aimed at restoring cash flow, negotiating debt repayments and addressing governance weaknesses. In contrast, 20 of the Western Cape’s 30 municipalities achieved clean audits in 2024-’25, among the best provincial performances in the country.
Financial collapse
According to a mayoral candidate for TWK, Jan Visagie, this is a sequence of events that led to TWK’s financial collapse. “A combination of ill-advised spending priorities and poor financial management by the previous coalition coupled with excessive spending on items not budgeted for created predictable financial shortfalls that led to the current situation.
“Unlawful procurement practices, and a deliberate absence of consequence management led to the situation we find ourselves in. The creation of superficial disasters to justify going outside the normal procurement processes was one method that led to excessive spending on items not only unbudgeted, but also not entirely necessary; for example, the exorbitant costs of security services.”
With only 35% of municipalities that are considered financially healthy Visagie said that with the help of the residents and officials TWK can be returned to excellence, but “only through financial discipline and sound financial management.
“It will require great financial discipline, prudential spending plans and the realistic alignment of budget priorities with our financial capacity. Infrastructure development and job creation must also take centre stage within TWK. We must appoint the right people with the right skills to do the job.” According to him, with the cooperation from all they can return TWK to excellence in five year’s time.
He said the misuse of legitimate crises or the creation of crises that led to the so-called justification for appointing service providers outside the Municipal Finance Management Act (MFMA) and awarding contracts without the required processes contributed to the municipality’s current situation.
“The failures of oversight in addition to the poor decisions are my biggest concern. You have a checks-and-balances system in local authorities, with the role of the internal auditor to ensure that systems are not only in place but also work as intended. Then there are the Municipal Public Accounts Committee (MPAC). On this committee private individuals are appointed as observers. Again, neither the MPAC members (councillors) nor the public observers reported any of the findings to the council as irregular. That may be due to the influence of senior officials or a lack of insight to ask the right questions and apply common sense. Greater scrutiny of processes and decisions were lacking.”
Basic services
History has shown that when a municipality is in financial difficulties basic services suffer. This is exactly what has happened to TWK. Not only are roads across the TWK municipal area in chaotic condition, but water and electricity also remain a problem. According to Visagie there are three services that require more attention than others: water, sewerage and refuse collection. “Ensure these services are addressed progressively, communicate the strategies to residents and secure their buy-in for the long-term recovery plans. We will go back to basics and deliver the quality of services that our residents deserve.”
Visagie has hope for the future of TWK and, as he puts it, it won’t be easy, but it is possible. “Success for TWK under the right leadership will be the restoration of financial stability and the delivery of quality basic services to all our communities by a capable and committed staff compliment operating within a stable environment.
“But most important will be a TWK that has won the confidence of investors to grow our local economy, create jobs and alleviate the cost of living crisis experienced by virtually everyone. That would give me great satisfaction.”
