Nala Local Municipality is implementing financial recovery measures to transition from an unfunded to a fully funded budget, as National Treasury requires municipalities to develop funding plans for continued service delivery.

The municipality faces growing budget deficits that threaten its ability to meet constitutional obligations and deliver basic services to communities. Failure to address the financial challenges will leave Nala financially distressed and unable to fulfil its constitutional mandate.

Cllr. David Ross, DA Councillor Nala Local Municipality, says the municipality’s inability to achieve a balanced budget is driven by high service delivery costs, poor maintenance of ageing infrastructure, rising employee and overtime expenses, and distribution losses from faulty or unmetered connections. Weak debt collection, ineffective credit control, stagnant prepaid electricity sales, and poor management of indigent water consumption have worsened the financial situation. Bulk electricity costs continue to place additional pressure on municipal finances.

Water losses have reached 40% of supply.

Recovery measures

The Finance Committee’s recovery plan includes linking the prepaid vending system to the billing system to account for all sales. The committee will review and implement an indigent policy on water flow metering and install prepaid meters. Financial proposals will be based on a 65% collection rate.

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A revised Cost Containment Policy aims to strengthen financial discipline through several measures. Municipal salaries in South Africa are set through the South African Local Bargaining Council agreements, which establish five-year wage agreements. The policy will focus on overtime control, including pre-approval requirements for all overtime, departmental overtime limits, and monthly monitoring and reporting to the Finance Committee and Council.

The policy proposes freezing non-critical administrative positions while protecting essential service delivery posts to contain growth in employee-related costs.

The committee will engage with Treasury on employee-related costs as a percentage of operating expenditure. If the municipality exceeds norms, Treasury will be requested to flag the budget as unsustainable and require revision before approval.

The Finance Committee will monitor monthly Section 71 reports and mid-year assessments under Section 72 of the Systems Act, and engage with Treasury and Vaal Central on implementing cost containment measures to ensure continued delivery of essential services.