Sixteen troubled Eastern Cape municipalities are slowly collapsing and have been flagged as being in financial distress by the provincial government.
The situation is so dire that projections indicate they may soon be unable to meet their financial obligations.
This was revealed by co-operative governance MEC Zolile Williams in response to parliamentary questions at the Bhisho legislature recently.
The red-flagged municipalitiesinclude Walter Sisulu, Makana, Kou-Kamma, Dr Beyers Naudé, Amathole district, Great Kei, Raymond Mhlaba, Amahlathi, Chris Hani district, Inxuba Yethemba, Enoch Mgijima, Sakhisizwe, King Sabata Dalindyebo, Kumkani Mhlontlo, Port St Johns and Ingquza Hill.
As a result of their financial state, Williams said budgets meant to service their communities were being used to pay their escalating debts, with service delivery in a shambles.
Williams was responding to parliamentary questions from DA MPL Retief Odendaal.
Asked about the extent of the financial distress faced by these municipalities, Williams told the legislature that their challenges were mostly in the areas of financial health, governance, service delivery provision and institutional governance
“Some of these municipalities have been projected not to be able to meet their financial obligations in the near future due to their financial status, with prevailing negative audit outcomes, without proper consequence management in place, deteriorating infrastructure with no provisions for maintenance and repairs, and also having high vacancies and organigrams not in line with the powers and functions of some municipalities,” Williams said.
“It has serious implications as some municipalities have huge Eskom and auditor-general debts that are escalating, which affects the budgets meant for service delivery, as they now have to compromise some service delivery initiatives to service these huge debts.”
Many owed Eskom millions, after having diverted electricity sales revenue towards other municipal needs.
They also owed the office of auditor-general Tsakani Maluleke millions for audits conducted.
Most of these municipalities are characterised by service delivery protests, crippling water crisis challenges, and power cuts due to their failure to service their Eskom bills.
In late 2024, co-operative governance and traditional affairs minister Velenkosini Hlabisa told parliament that out of SA’s 257 municipalities, 66, or 26%, of them were defined as distressed.
Broadly, a distressed municipality in South AfricaSA refers to a local government that is facing severe financial, operational, or administrative challenges, often leading to an inability to provide basic services to its residents.
He said the municipalities were characterised by “political instability and infighting, unfunded budgets, lack or inadequate allocation of repairs and maintenance budgets, usage of grants for operational expenses, increasing indigency leading to lack of payment of services, resulting in low revenue collection, poor planning and maladministration”.
Williams said his department, together with the provincial treasury, was assisting the municipalities through monitoring the implementation of financial recovery plans and compliance with the Eskom debt incentive programme.
Odendaal said on Thursday it was unacceptable that the provincial government continued to watch as municipalities collapsed under the weight of debt and dysfunction.
“The fact that these councils are now projected to be unable to meet their financial obligations in the near future is not just an administrative concern, it is a crisis that directly threatens their livelihoods, dignity, and basic human rights of our people.
“The cracks have been visible for years and small businesses, the lifeblood of our local communities, are shutting down and disinvesting at an alarming rate as they can no longer operate in these dysfunctional municipalities,” Odendaal said.
In many towns where these councils were located, the private sector was “retreating entirely, unable to operate in environments plagued by dysfunction, instability and nonpayment”.
“As businesses collapse or flee, jobs vanish with them. Entire families are being pushed into poverty and local economies are grinding to a halt,” he said.
“This is not a new problem. It is due to years of cadre deployment, political interference in administration and the absence of professional, merit-based appointments.”
EFF provincial secretary and MPL Simthembile Madikizela said his party had on numerous occasions raised concerns regarding the instability of most municipalities in the province, and Williams’ inability to intervene.
“Institutional governance and governance at large are the main contributing factors to the dire financial situation in these municipalities.
“The poor governance is as a result of factionalism within the ruling party, which has broken most councils in the province into two groups as they approach their regional conferences.
“But the most unfortunate situation is that the provincial leadership of the ruling party itself is unable to guide in the situation,” Madikizela said.
Daily Dispatch
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