National Treasury Director-General Duncan Pieterse.
Image: GCIS
The National Treasury announced on Friday that of the 69 municipalities that have had their equitable share transfers withheld, 27 received their funding on Thursday, and 22 others will receive their funds from Monday.
Briefing the joint meeting of four parliamentary committees, National Treasury Director-General Duncan Pieterse said all 69 municipalities have responded to Finance Minister Enoch Godongwana’s letter informing them of the withholding of their R13.5 billion transfers after they failed to comply with financial management regulations.
“Our teams are processing all the information received from municipalities to determine if municipalities meet the criteria in the letters addressed to the mayors. Additionally, teams from National Treasury and Provincial Treasuries are assisting the affected municipalities to conform,” Pieterse said.
The National Treasury withheld the equitable share transfers to instill fiscal discipline and ensure that public money is properly managed, that unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE) is addressed, and that municipal officials and office-bearers are held accountable where required by law.
Pieterse told the MPs that only four municipalities conformed to the UIFWE requirements and will receive the full amounts withheld.
He said as and when municipalities conformed, the funds would be released weekly.
Pieterse said 27 municipalities received their equitable share transfers on Thursday.
“Ten municipalities received the full amount of the withheld Local Government Equitable Share totalling R1.7 billion.
"Seventeen municipalities received a portion of R2.9 billion to strictly pay the relevant creditors - SARS, pension funds, Eskom, the Auditor-General of South Africa, and water boards - and thereafter must submit proof of payment to the National Treasury for them to receive the remaining balance,” said the director-general.
The municipalities that received the full amounts are Victor Khanye, AbaQulusi, Umzinyathi District Municipality, Nkomazi, Thembelihle, Randwest City, Buffalo City, Umsobomvu, Port St Johns, and Impendle.
Those that received a portion of their funds and still have to submit proof of payments are Naledi, Tokologo, Nketoana, Phumelele, Thabazimbi, Merafong City, Lesedi, Musina, Modimolle-Mookgopong, Tswaing, Maquassi Hills, Mamusa, Ngaka Modiri Molema District Municipality, Kgetlengrivier, JB Marks, Ditsobotla, and City of Johannesburg.
Pieterse further said 22 municipalities will receive their equitable share in the week of July 20, which starts on Monday.
Those that will receive the amounts are: Xhariep District Municipality, Tokologo, Phumelela, Fetakgomo-Tubatse, Musina, Thabazimbi, Kgetlengrivier, and Naledi.
The Emadlangeni, Newcastle, Kamiesberg, City of Johannesburg, Kai Garib, Renosterberg, Mafube, Mantsopa, Ngwanthie, Emakhazeni, Mohokare, Kopanang, Letsemeng, and Nketoana will receive a portion of their funds on the same day.
Pieterse said the national and provincial departments that owe municipalities for services rendered will also have their equitable share transfers withheld.
Godongwana has written to the national departments, notifying them of his intention to withhold the funds from the budget for the debt owed to municipalities.
Letters have been sent to Provincial Treasuries regarding provincial departments in April and May, with Parliament already informed of the planned withholding of the transfers to the departments.
“All eight provinces that received letters responded, and the responses have since been analysed and second letters drafted for final notice for them to submit outstanding documents, as well as submit reasonable payment terms,” Pieterse said.
Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa said both his department and the National Treasury held the common view that the behaviour of defaulting municipalities must be stopped.
He said while they understood the constitutional prerogative of the National Treasury, CoGTA held the view that a different approach should have been used.
“When stopping funds to municipalities, a similar stance should be taken on the provincial and national departments because they are the ones rendering the municipalities, in one way or the other, unable to pay people or entities because they are not paying municipalities,” he said.
Hlabisa also said CoGTA and Treasury agreed at their meeting on Tuesday to ensure that there is an intervention for those municipalities unable to comply.
“We agree that should there be challenges in some municipalities, we will need to relax the approach to avoid a total collapse of services.”
He was delighted that Pieterse informed the MPs that action was being taken against departments that owe municipalities.
“I am glad that the director-general gave progress on municipalities that are responding to our call that the National Treasury must implement a similar stance on other spheres. We are on the same page now.”
Godongwana said there was a need as part of their strategy to minimise the impact on communities.
“I agree that withholding or stopping (the funds) is the last resort. It is a painful exercise we don't want to do but if we were working together to achieve this oversight, our challenge must be to fix the local government moving forward,” he said.