The KwaZulu-Natal Treasury is persuading the National Treasury to consider stopping transferring financial allocation to municipalities that have failed to come up with unauthorised, irregular, fruitless and wasteful expenditure prevention and reduction strategies by the end of this month.
The mooted action comes after the latest report on the province’s 54 municipalities came out. It shows that financial mismanagement is getting worse and officials are not held accountable.
Number of defaulters increasing
The report by the provincial treasury found that the number of municipalities facing financial challenges has increased from 17 to 20. Among the municipalities fingered are Impendle, Zululand, Jozini, Endumeni, Umkhanyakude, Msunduzi, Newcastle and Okhahlamba.
The report shows debt owed to KZN municipalities in the third quarter of the financial year ending last month. The debt stood at R64.3-billion. This increased to R67.1-billion in the fourth quarter and a R2.8-billion increase. It is a situation that KZN Finance MEC Francosi Rodgers said is unsustainable, hence he wants to take drastic action.
What further troubled Rodgers was that R56.6-billion in the total figure owed to municipalities. This is debt exceeding 90 days. And over the same period, money owed by municipalities increased from R7.4-billion to R9.3-billion. This is an increase of 25.5%, which he stressed is worrisome.
Finance minister moots drastic action
In a letter to MEC Rodgers, the Minister of Finance, Enoch Godongwana, indicated his willingness to invoke section 216 (2) of the Constitution and stop all financial transfers to municipalities who have failed to implement unauthorised, irregular, fruitless and wasteful expenditure prevention and reduction strategies by August 31 2025.
The minister noted that persistent non-compliance with the MFMA prescripts cannot continue unabated. Drastic action needed to be taken.
Rodgers said he agrees with this view. Especially in light of the assistance that remains on offer by the National and Provincial Treasuries.
