PRETORIA — Cooperative Governance and Traditional Affairs (CoGTA) Minister Velenkosini Hlabisa has issued a firm December deadline for non-compliant municipalities to rectify their financial management, warning that the indefinite withholding of funds will inevitably lead to a total collapse of local services. This directive follows the National Treasury’s recent decision to release R7.1 billion in equitable share allocations to 69 municipalities that had previously faced funding suspensions over concerns regarding poor fiscal accountability and management.
Addressing the ongoing challenges in local government, Minister Hlabisa emphasized that a “one-size-fits-all” strategy is no longer viable. While the majority of municipalities have now met compliance requirements, 21 remain non-compliant. Many of these struggling entities face historical challenges, including long-standing unfunded budgets and an inability to pay municipal staff salaries even before the recent funding withholdings were implemented.
To address this, the national government has activated a differentiated approach. Municipalities that have demonstrated compliance will continue to be monitored and encouraged to maintain fiscal discipline. For the 21 struggling municipalities, a more concerted, hands-on support system is being deployed. Minister Hlabisa highlighted that recent interventions in previously struggling municipalities have already begun to bear fruit, with some successfully clearing salary backlogs and stabilizing operations.
This renewed strategy involves activating all three spheres of government. Premiers and Members of the Executive Council (MECs) are now working directly with national government and local municipalities to ensure compliance before the second tranche of funding is released in December. The South African Local Government Association (SALGA) and labor unions are also being brought on board to ensure vigilance, particularly as some service providers have threatened to halt operations over unpaid invoices, which would further cripple service delivery.
In a significant move to alleviate municipal cash flow crises, Minister Hlabisa revealed that national and provincial government departments currently owe municipalities billions of Rands. Starting in September, a similar compliance enforcement approach will be activated to compel these government entities to pay their municipal debts. This will enable municipalities to settle their own outstanding obligations to critical service providers such as waterboards and Eskom.
Progress has already been recorded in stabilizing local government finances. The number of municipalities operating with unfunded budgets has been reduced from 113 to 76. The CoGTA is targeting further reductions during the revised budget period in January and February, with the goal of establishing a sustainable baseline for the 2027/2028 budget cycle.
This coordinated effort aligns with the upcoming final launch of the White Paper review on local government in October. The review champions the District Development Model (DDM) to break down departmental silos and introduces a differentiated funding model. This new model acknowledges that some municipalities lack a viable revenue base and require tailored resource allocation rather than blanket funding formulas.
With local government elections approaching on November 4, Minister Hlabisa concluded with a direct call to action for the public. He urged communities to register to vote on August 1 and 2, emphasizing that civic participation is the most powerful tool for accountability.
“The capacity of the people we elect goes to the bottom of the problem,” Minister Hlabisa stated. He noted that competent councilors will not adopt unfunded budgets, will ensure grants are spent on their intended development projects, and will prioritize infrastructure maintenance. By exercising their right to vote, citizens can install capable leadership and press the reset button on municipalities that have struggled to deliver basic services for far too long.