BLOEMFONTEIN – The trouble-ridden Mangaung Metro Municipality faces the drastic action of having its December equitable-share allocation withheld, owing to its chronic inability to improve its financial state.
The Democratic Alliance(DA) in Mangaung has confirmed that the National Treasury has issued a formal notice under section 216(2) of the Constitution, citing the persistent inability of authorities to improve the municipality’s financial state and non-compliance with legislation.
“The Metro’s December equitable-share allocation may be withheld due to severe and persistent breaches of the Municipal Finance Management Act (MFMA). This is one of the most serious financial enforcement measures available to the Treasury. This signals that the Mangaung Metro is on the brink of fiscal failure and service delivery collapse,” says Tjaart van der Walt, Mangaung Metro councillor.
“In terms of MFMA section 52(d), mayor Gregory Nthatisi must report to the Council on the implementation of the budget and the financial state of the municipality. Despite the gravity of this threat, the mayor has failed to table the Treasury letter and its implications before the Council, keeping both councillors and residents in the dark,” says van der Walt.
“A threatened stoppage of the equitable share is unquestionably a material financial event and must be disclosed immediately. Furthermore, MFMA section 60(1)(c) requires the Accounting Officer to report “any impending financial problems” to the mayor, and the Council must be allowed to consider the City’s response as required for the constitutional process under section 216(2),” he added.
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According to van der Walt, there are signs of a collapse of the Metro’s finances. “Diesel shortages and non-payment to contractors have already led to failure in basic service delivery in the city during November. The Municipal Public Accounts Committee (MPAC), the key oversight body mandated to deal with Unauthorised, Irregular, Fruitless, and Wasteful Expenditure (UIFW), is itself dysfunctional. The MPAC has not followed its approved work plan.”
“In a last-ditch attempt to address the Treasury and DA letters, on 18 November, a last-minute MPAC meeting was held without prior access to the documentation, contrary to the standing rules and MPAC Terms of Reference. A day later, more than R7 million in UIFW expenditure was presented with the same procedural defects. This breakdown undermines lawful oversight at a time when Mangaung needs it most. The Treasury requires Mangaung to show a 75% reduction in its UIFW balances, implement consequence management, and demonstrate tangible action. The Metro is nowhere near compliance, placing its equitable share and service delivery at immediate risk,” says van der Walt.
Due to these financial problems, rating agency Moody’s downgraded the Mangaung Municipality’s long-term global scale issuer rating to junk status in 2020.
