The Free State Department of Cooperative Governance, Traditional Affairs (CoGTA) and Human Settlements says it supports National Treasury’s decision to withhold equitable share allocations from municipalities, despite the province having the highest number of councils affected by the intervention nationwide.
While several municipalities elsewhere in the country have challenged or sought to explain Treasury’s decision, the department said the move was a necessary step to restore financial discipline, accountability and compliance with local government legislation.
Sixteen municipalities in the province, including Mangaung Metro, Matjhabeng, Maluti-a-Phofung, Ngwathe and Dihlabeng, are among the 69 municipalities whose July equitable share transfers were temporarily withheld over persistent financial mismanagement and non-compliance with the Municipal Finance Management Act (MFMA).
“The Department views this intervention as a necessary measure to strengthen accountability, improve financial governance, and reinforce compliance with the legislative framework governing local government,” the department said on Thursday.
The department however, acknowledged that withholding the funds could have serious implications for vulnerable communities that depend on municipalities for basic services, urging affected municipalities to urgently address Treasury’s concerns.
The intervention follows Treasury’s decision to invoke Section 216(2) of the Constitution and Section 38 of the MFMA, citing persistent failures by municipalities to adopt funded budgets, curb unauthorised, irregular, fruitless and wasteful expenditure (UIFWE), and meet statutory obligations, including payments to Eskom, SARS, pension funds and water boards.
The Free State emerged as the province hardest hit by the sanctions, with 16 municipalities affected more than any other province.
The province’s endorsement of Treasury’s decision comes against the backdrop of years of deteriorating municipal finances and governance failures that have placed several Free State municipalities among the country’s worst-performing local governments.
Auditor-General findings have repeatedly painted a bleak picture of municipal governance in the province, with no municipality receiving a clean audit in recent years and many trapped in recurring qualified opinions or disclaimer audit outcomes.
Financial pressures have also intensified.
Municipalities in the province collectively owe billions of rand to Eskom and bulk water suppliers, while infrastructure grants worth billions have previously been returned to National Treasury after municipalities failed to spend the funds.
The situation has been particularly severe in municipalities such as Matjhabeng, which has accumulated massive debts to Eskom and water boards while battling deteriorating infrastructure and declining service delivery.
Residents across several municipalities have endured recurring water shortages, sewage spills, refuse collection failures and collapsing municipal infrastructure as financial instability deepened.
Despite these challenges, CoGTA insisted Treasury’s intervention should be viewed as corrective rather than punitive.
The department said it would continue working with the Free State Provincial Treasury to provide targeted support to municipalities experiencing genuine financial or operational challenges.
“The Free State Provincial Government remains committed to supporting municipalities in strengthening governance, improving financial management and ensuring compliance with the Constitution, the Municipal Finance Management Act and all other applicable legislation,” the department said.
It said the province remained confident the interventions would help restore financial sustainability, strengthen accountability and ultimately improve service delivery.
The public backing of Treasury’s intervention also amounts to an acknowledgement by the provincial government that serious governance and financial management failures persist across municipalities under its oversight.
Treasury has previously indicated that the withheld allocations will be released once municipalities comply with prescribed conditions, including entering into repayment agreements with creditors and demonstrating improved financial management.
The 16 Free State municipalities affected are Mangaung, Letsemeng, Kopanong, Mohokare, Xhariep District Municipality, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe and Mafube.
