DA requests urgent intervention to restore stability in municipalities with unfunded budgets in the 2017/18 financial year

The DA will write to the Minister of Finance, Nhlanhla Nene, requesting the immediate intervention in terms of section 139(5) and (7) of the Constitution, read with the relevant sections of the Municipal Financial Management Act, to restore financial stability to South Africa’s failing municipalities.

This follows a reply to a parliamentary question to Minister Nene, which has revealed that a shocking 43% of municipalities (112 out of 257) have unfunded budgets in the 2017/18 financial year.

This means that these municipalities do not have sufficient resources to meet the service delivery needs of residents, as their income does not meet their forecast expenditure. It may also indicate that municipalities are not budgeting effectively, or are not adopting austerity measures to ensure that basic services are prioritised.

The DA cannot allow our local governments, which have a clear mandate of service delivery, to fail. What is even more shocking, is that only 14 have approved financial recovery plans.

What is particularly distressing is the lack of understanding of the Constitution on the part of the Minister. He suggests section 139(5) of the Constitution affords a provincial executive (i.e. the Premier and MEC’s of the relevant province) a discretion in deciding whether or not to impose a financial recovery plan on a failing municipality. In fact, section 139(5) reads as follows:

If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments, or admits that it is unable to meet its obligations or financial commitments, the relevant provincial executive must—

(a) impose a recovery plan aimed at securing the municipality’s ability to meet its obligations to provide basic services or its financial commitments, which—

(i) is to be prepared in accordance with national legislation; and

(ii) binds the municipality in the exercise of its legislative and executive authority, but only to the extent necessary to solve the crisis in its financial affairs; and….

 Section 139(7) then imposes a similar obligation on the national executive (i.e. the Cabinet) where a province cannot or does not exercise its powers in terms of Section 139(5). The DA finds it completely disingenuous to “pass the buck” to municipalities and provinces.

The DA will continue mounting pressure on Minister Nene to step up and take responsibility for the failure of the national executive to act decisively and impose financial recovery plans on these dysfunctional municipalities.

Statement issued by Kevin Mileham MP, DA Shadow Minister of Cooperative Governance and Traditional Affairs, 4 May 2018