MOPANI DISTRICT, LIMPOPO — The Mopani District Municipality is among the 69 local authorities across South Africa that have not received their equitable share from the National Treasury this month. With more than R300 million withheld for July, Mayor Pule Shayi has stepped forward to address the municipality’s financial standing, defend its compliance with financial regulations, and outline how the funding shortfall impacts local service delivery.
The withholding is part of a broader national fiscal enforcement. Across the country, 69 municipalities failed to receive their equitable share allocations this month, including 11 in the Northern Cape. Highlighting the severity of financial mismanagement in some local authorities, the Thembelihle Local Municipality in Hopetown recently received a qualified audit report for the 2023/24 financial year after overspending its budget by 186%, with nearly half of its expenditure classified as fruitless and wasteful.
Despite the national trend of municipal financial distress, Mayor Shayi maintains that Mopani’s current operational financial health is stable. He noted that the municipality generates sufficient cash flow from its revenues and is consistently paying its creditors, including Lepelle Northern Water and the Department of Water and Sanitation (DWS).
However, the municipality faces significant historical financial hurdles. It currently owes Lepelle Northern Water over R300 million, the DWS R384 million, and carries a massive budget deficit of R2.4 billion. Addressing the deficit, Mayor Shayi clarified that the R2.4 billion shortfall stems from a historical financial investigation covering the period between 2009 and 2019, which was conducted in agreement with the Auditor-General. He insisted that over the past four to five years, the municipality has effectively managed its credit and bulk water purchases, proving its current operational viability.
The specific reason for the R300 million withholding relates to Section 32, Subsection 2 of the Municipal Finance Management Act (MFMA). This regulation requires municipalities to investigate unauthorized, irregular, and wasteful expenditure, apply consequence management, and recover lost funds. National Treasury flagged Unauthorised, Irregular, Fruitless, and Wasteful (UIFW) expenditure based on the municipality’s previous Annual Financial Statements (AFS) and audit reports.
In response to Treasury’s demands, Mayor Shayi confirmed that the municipality has taken decisive action. The Municipal Public Accounts Committee (MPAC) investigated the flagged reports, and the Financial Misconduct Board presented recommendations. Furthermore, independent investigators were appointed to handle the allegations. As a result of these consequence management measures, seven officials have been fired, while others resigned. Notably, this includes the former Chief Financial Officer (CFO), who was officially dismissed early this year following a formal disciplinary process.
The immediate withholding of R300 million will have tangible effects on the ground. Mayor Shayi warned that the shortfall will impact the bulk purchasing of water from Northern Water and the DWS, employee salaries (including Expanded Public Works Programme workers), and subsidies for indigent residents receiving free basic services. Payments to Eskom for energizing boreholes will also be affected. However, he assured residents that specific allocations, such as the Municipal Infrastructure Grant (MIG), WISK, and other direct grants, remain unaffected.
Mayor Shayi expressed confidence that the impasse will be resolved swiftly. He noted that all substantive evidence and investigation reports have been submitted to the National Treasury. Following ongoing engagements and fact-verifications, the municipality remains optimistic that the Treasury will be satisfied with the consequence management implemented and will release the withheld equitable share in accordance with the MFMA and other applicable legislation.
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