FREE STATE – Three more municipalities in the Free State are grappling with severe financial distress, governance failures and threats to service delivery, with residents facing the consequences of poor financial management and delayed accountability.

These three, Nala, Xhariep and Ngwathe, are also on the list of 69 municipalities across all nine provinces in the country that are affected by the announcement by the South African National Treasury that it will be withholding funding in a move aimed at enforcing fiscal discipline. There are 16 municipalities in the Free State.
The decision, announced on Tuesday, affects more than a quarter of the country’s 257 municipalities and comes as authorities cite widespread financial mismanagement at local government level.

Nala Local Municipality faces mounting pressure to account for budget implementation and compliance with financial recovery measures. The municipality is currently under intervention, with an administrator and appointed chief financial officer working to address governance failures.

Water losses estimated at 40% and electricity losses of 28% continue to drain municipal resources, while approximately R80 million owed by state departments remains outstanding. The municipality also faces debt impairment of approximately R108 million.

The municipality has registered about 8 500 indigent households but aims to increase this to 12 000. Questions remain about whether the Service Delivery and Budget Implementation Plan has been prepared within required timeframes and whether performance agreements for senior managers have been concluded as required by law.

David Ross, a councillor in Nala, said residents deserve clear answers on whether the municipality is complying with its legal duties and whether the intervention is producing measurable improvements.

“The people of Nala cannot be expected to carry the consequences of poor planning, weak oversight and delayed corrective action,” Ross said.

In neighbouring Xhariep District Municipality, the Auditor-General has issued repeated warnings that the municipality remains at risk of failing as a going concern due to persistent financial mismanagement.

Jacques van Rensburg, a councillor in Xhariep District Municipality says the municipality operates with a salary bill exceeding 80% of its total budget, leaving minimal resources for service delivery, infrastructure maintenance and economic development. The financial crisis became more apparent when employee salaries were paid late this month, highlighting severe cash flow challenges.

The situation in Ngwathe Local Municipality has reached a critical point, with the municipal council dissolved following a court order under Section 139 of the Constitution. All elected councillors, including the executive mayor, speaker and mayoral committee members, have ceased to hold office.

Municipal officials and administrative staff continue to work under the authority of an appointed administrator while a court-ordered recovery plan is implemented. Service delivery is expected to continue during the administration period.

All three municipalities face the challenge of restoring financial stability while maintaining essential services to residents. The intervention measures in place will be closely monitored to determine whether measurable improvements can be achieved.

Residents are encouraged to report service delivery failures through available municipal channels as administrative teams work to address years of accumulated governance and financial management challenges.

The decision by National Treasury affects more than a quarter of the country’s 257 municipalities and comes as authorities cite widespread financial mismanagement at local government level.

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