MATJHABENG – Matjhabeng Local Municipality is facing mounting financial and legal pressure after National Treasury suspended key funding allocations while residents simultaneously threatened court action to halt the municipality’s proposed Economic Summit.

The twin developments have intensified scrutiny of a municipality already burdened by crippling debt, a Financial Recovery Plan and growing concerns over governance and financial management.

National Treasury announced on Tuesday that Matjhabeng is among 69 municipalities across South Africa whose equitable share allocations have been partially suspended in an effort to enforce fiscal discipline. The intervention, affecting more than a quarter of the country’s 257 municipalities, follows what Treasury describes as persistent financial mismanagement.

Acting in terms of Section 216(2) of the Constitution and the Municipal Finance Management Act, Treasury said the suspension was necessary to “instil fiscal discipline and ensure public money is properly managed”.

Treasury cited recurring unauthorised, irregular, fruitless and wasteful expenditure

Treasury cited recurring unauthorised, irregular, fruitless and wasteful expenditure, unfunded budgets, overdue payments to Eskom and water boards, unpaid statutory deductions and inadequate action against officials responsible for financial misconduct.

For Matjhabeng, the announcement comes as the municipality owes more than R1.58 billion to Eskom and over R6.84 billion to Vaal Central Water, raising ongoing concerns about the sustainability of essential electricity and water services.

Democratic Alliance mayoral candidate Piet Botha warned that withholding equitable share funding could have serious consequences for residents.

The equitable share assists indigent households

“The equitable share assists indigent households who cannot afford municipal services,” Botha said. “If these funds are withheld, service delivery will inevitably suffer. Officials may not receive salaries or overtime, and creditors may remain unpaid.”

However, Botha said there was hope the matter could soon be resolved. He said Matjhabeng Speaker Councillor Bhekumuzi Stofile, who is also President of the South African Local Government Association (SALGA), met with the Minister and National Treasury officials on Tuesday.

“He advised that the matter is about 80% resolved and is hopeful it will be concluded favourably within the next day or so,” Botha said.

According to Botha, Treasury accepted that the municipality had responded to the initial notice regarding the proposed suspension and had submitted proof that third-party obligations, including medical aids, pensions, provident funds and SARS, were up to date. While Eskom and Vaal Central Water had not been paid in full, partial payments had been made.

He said Treasury would provide the municipality with a list of outstanding compliance issues, including the establishment of an Audit Committee, Municipal Planning Tribunal and Disciplinary Board, which are expected to be addressed at the next council meeting.

Adding to the municipality’s difficulties, a coalition of concerned residents, ratepayers and political representatives has issued a formal pre-litigation notice demanding that the proposed Matjhabeng Economic Summit scheduled for the end of July be suspended pending proof that it complies with all constitutional and legislative requirements.

The complainants allege there is no publicly available evidence that the summit has been approved through the municipality’s Integrated Development Plan, Municipal Council or approved budget. They further question whether procurement processes have already begun without lawful authority.

If the municipality cannot demonstrate that every legal requirement has been met, public money cannot lawfully be spent

“If the municipality cannot demonstrate that every legal requirement has been met, public money cannot lawfully be spent,” the notice states.

The group has demanded that the municipality produce council resolutions, budget approvals, procurement records, business plans and legal opinions within three days, together with a written undertaking that no expenditure or contractual commitments will proceed until full compliance has been demonstrated.

Failing that, the coalition says it will seek an urgent High Court interdict to halt the summit and may refer the matter to oversight bodies, including the Auditor-General, National Treasury and the Free State Provincial Treasury.

At the time of publication, Matjhabeng Local Municipality had not responded publicly to either the Treasury intervention or the legal notice. Treasury has indicated that suspended funding will be restored once municipalities meet the required financial governance standards.

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