The Matjhabeng Local Municipality’s Financial Recovery Plan is facing severe implementation challenges, with officials completing only 7% of required activities despite being under constitutional intervention since October 2025.
The municipality operates under Section 139(5)(a) and (c) constitutional intervention, with a financial recovery plan approved by the MEC for Finance on 22 October 2025. The provincial executive representative has assumed responsibility for implementation, wielding authority to issue directives, ratify financial decisions, and ensure municipal compliance. The rescue phase concludes on 31 July 2026.
A report tabled during an oversight visit on 26 January revealed that the municipality confronts a staggering R14 billion debt burden, comprising R6 billion owed to Eskom and R7 billion to Vaal Central Water. Operating with an unfunded budget whilst achieving merely a 51% collection rate, the institution has received qualified audit opinions for three consecutive years.
Rising indigent debt
Rising indigent debt of R895 million, combined with water and electricity services operating at losses, has compounded financial distress facing the Free State municipality.
Critical governance failures have emerged, including irregular contracts, a dysfunctional disciplinary board, and 907 employees plus councillors owing the municipality R119,8 million for over 90 days. Legal costs reached R26 million in 2024-’25, whilst the municipality faces 70 default judgements.
The absence of litigation strategies, contract management systems, and adequate record-keeping has further undermined institutional capacity.
Service delivery faces unprecedented challenges, with water distribution losses reaching 57% (R418 million) and electricity losses at 28% (R204 million). The municipality allocates merely 1,2% of its budget to maintenance, substantially below the recommended 8% norm.
Infrastructure has collapsed across the region, whilst master plans remain either non-existent or severely outdated.
Progress remains critically inadequate, with municipal officials completing only 2 of 31 key recovery activities by November 2025. Five activities are in progress, whilst 24 have not commenced. The Joint Committee on budget and expenditure cannot function effectively due to non-submission of supply chain management information.
Municipality continues to fail
Despite intervention protocols, the municipality continues procuring outside prescribed frameworks. Four new sewer network projects worth R245 million are scheduled for Welkom, including Bronville (R45 million), Naudeville (R52 million), Flamingo (R59 million), and Rheederpark (R89 million). The Water Services Infrastructure Grant (WSIG)-funded water infrastructure project is 85% complete, creating 19 jobs with a projected completion cost of R45,6 million.
The municipality persistently defaults on basic financial recovery plan requirements, contravening reporting procedures despite provincial executive representative advisories. Critical failures include non-implementation of directives, failure to submit required ratification information, and the executive mayor inappropriately presenting recovery reports to Council.
As such, the provincial executive representative cannot fully implement expenditure and cash flow management measures, restricting operational direction for creditor and debt management. This undermines the plan’s effectiveness and constrains its impact on service delivery improvement.
The intervention faces significant challenges in restorring financial stability and ensure basic service provision, highlighting urgent need for enhanced compliance and municipal cooperation to prevent total institutional collapse.
