EASTERN CAPE — The Eastern Cape government has outlined a comprehensive response to the ongoing municipal funding crisis after the National Treasury withheld equitable share allocations from several local municipalities. Following a provincial local government accountability session, provincial leadership detailed urgent action plans to address financial mismanagement, enforce consequence management, and secure the release of the withheld funds.
The briefing comes amid widespread concerns after the National Treasury paused equitable share disbursements for July to 69 municipalities across the country, including major metros in the Eastern Cape such as Buffalo City Metro and Nelson Mandela Bay, as well as local municipalities like Port St. John’s.
During the media briefing, provincial leadership reiterated that the mismanagement of funds and over-expenditure have been overarching issues in the region. The Deputy Minister for Cooperative Governance and Traditional Affairs has visited the province multiple times to engage with local leadership, including Nelson Mandela Bay Mayor Babalwa Lobishe and Buffalo City Metro Mayor Princess Faku, to discuss turnaround strategies for financial management.
A central focus of the provincial response is the enforcement of consequence management for individuals implicated in financial wrongdoing, an area previously highlighted as lacking in these municipalities. Furthermore, the Eastern Cape Premier has called for the strict enforcement of Section 154 of the Constitution, mandating that the Department of Cooperative Governance and Traditional Affairs, alongside the provincial government, provide targeted support to municipalities facing severe financial challenges.
To ensure sustained accountability, the Premier announced the creation of a local government oversight mechanism, which will include quarterly oversight sessions dedicated to addressing the systemic challenges experienced by municipalities.
The release of the withheld funds remains contingent on the municipalities’ ability to present viable recovery plans. According to the National Treasury, the resumption of equitable share allocations depends on how quickly municipalities can establish payment arrangements with major creditors, such as Eskom and regional water boards.
Progress is already underway in some areas. Officials confirmed that the Buffalo City Metro and the Port St. John’s municipality have submitted detailed action plans to the National Treasury. These submissions, which outline strategies to maximize revenue collection and address unrecoverable funds, are currently undergoing reassessment to determine if the withheld funds will be released in the near term. Other municipalities in the province are reportedly following suit with similar submissions.
Provincial leadership also emphasized the critical role of Municipal Public Accounts Committees (MPACs) in tightening local governance and controlling municipal funds. Officials urged these committees to be more proactive in developing and executing recovery plans for misused funds. However, it was noted that the effectiveness of MPACs is sometimes hindered by political interference and coalition differences, particularly in municipalities with complex governing arrangements like Nelson Mandela Bay.
The provincial government maintains that overcoming these political hurdles and prioritizing strict financial governance are essential steps toward normalizing municipal operations and restoring the flow of critical equitable share funding.
