WeeklySA_AdminBILLING: In December 2024 Treasury wrote to all 257 municipalities in arrears, warning them that non-payment breached the Municipal Finance Management Act…
By Molefe Seeletsa
The National Treasury has revealed that the Auditor-General is owed close to R2 billion by government institutions, including municipalities and state-owned entities.
Officials from Treasury and Auditor-General Tsakani Maluleke appeared before Parliament today to discuss the office’s finances and funding.
The Auditor-General audits and reports on the accounts, financial statements and financial management of all national and provincial departments, Parliament, municipalities, and SOEs.
As a Chapter 9 institution, it operates on a self-funding business model, billing government entities for work performed at public tariffs.
Treasury’s accountant-general, Shabeer Khan, briefed MPs on interventions aimed at recovering the outstanding debts owed to the Auditor-General.
He told the Standing Committee on the Auditor-General (Scoag) that in December 2024 Treasury wrote to all 257 municipalities in arrears, warning them that non-payment breached the Municipal Finance Management Act (MFMA).
The letters cautioned municipalities that failure to act could lead to Treasury invoking Section 216(2) of the Constitution, which empowers the finance department to withhold funds.
“We have seen that with this initiative already in the month of December that message has seen municipalities paying the Auditor-General in the tune of R460 million, “Khan said.
He highlighted that a key underlying problem is that many municipalities are operating on unfunded budgets.
“This is really the root cause in municipalities not being able to pay their creditors timeously or deliver services as required.”
Khan explained that after sending the letters, the Auditor-General provided the Treasury with a list of municipalities that had either not made payments or failed to enter into payment arrangements.
The National Treasury subsequently obtained approval from Finance Minister Enoch Godongwana to withhold the March 2025 funds from municipalities that did not respond proactively.
According to Khan, non-compliant municipalities were warned that their equitable share of funds for local government will be stopped and released only in instalments. The first instalment must be strictly used to pay the respective creditors. Khan said the condition would only be fulfilled once municipalities provide proof of payment.
“Should this condition not be met, the second instalment of the equitable share will not be released.” Municipalities will also be required to submit a valid repayment agreement.
As of July 31, the outstanding debt from the eight municipalities whose equitable share funds were withheld stood at R90.6 million — up from R83.6 million in October last year.
Just over R25 million had been collected by 31 July as a result of Treasury’s intervention.
“Whilst we are seeing an improvement, there are other areas that have increased which is a reason for concern, “Khan said.
At least 13 municipalities have entered into payment arrangements with the Auditor-General’s office to the value of R126.2 million.
Khan further revealed that the Auditor-General’s debt had risen from R1.3 billion to R1.8 billion.
This includes R1 billion in current invoices — R900 million billed in July and R188 million billed in June.
Currently, the municipal sector owes the Chapter 9 institution R437 million, while national and provincial departments owe R155 million and R447 million respectively as of 31 July.
Of the total debt, R74 million is over 60 days overdue and R41 million is over 90 days overdue.
SOEs listed as “other debtors”, owe the Auditor-General R644 million of the total debt.
Khan indicated that R183 million of the R644 million comprises long-standing debt from entities either liquidated, in business rescue or in financial distress. The entities include Denel (R82 million), South African Post Office (R63 million), South African Express Airways (R21 million), Pelchem (R11 million), Autopax (R6 million), and Mango Airlines (R2 million).
Khan said it had been recommended to the office to write off the R40 million owed by liquidated SOEs. “They will have to engage in the liquidation process and any amounts that are not recovered through the liquidation process will have to be written off.”
It also emerged that the Auditor-General has asked the Treasury to direct funds to settle outstanding debts, but the finance department is not considering this request due to the “constrained fiscus”.
The inability to settle audit fees, according to the Auditor-General, continues to undermine its financial sustainability.
Maluleke said audit fees are negotiated with auditees and they are determined on the risk profile, the audit programme, financial statements, performance information and compliance, among other things.
MIRROR Briefs
R86B TO UPGRADE CITY
South Africa’s capital have secured commitments worth R86 billion to help upgrade the city, lift economic growth and create jobs.
The pledges for Pretoria – now known as Tshwane – include R16 billion for projects in a range of industries including property and the automotive sector, Mayor Nasiphi Moya told an investment summit.
Another R70 billion in funding was promised for infrastructure, aviation and renewable energy, of which R6.8 billion was already locked up in active projects. The pledges come from a range of local companies active in those sectors.
“We need to be honest about our finances. Our city has really been stretched and our capital budget has not kept pace with the scale of development, “Moya said.
At the current pace of investment, it would take 36 years to fund the infrastructure that the city needs in the next decade. “That is a gap we cannot close through public funding alone.”
The city of Tshwane is South Africa’s second-largest economy, behind the commercial hub of Johannesburg and hosts manufacturing plants for the Ford Motor Co and BMW AG. Both cities are located in the province of Gauteng.
The event followed a similar summit for Gauteng in April that attracted R312 billion in pledges, with 170 bankable projects. – Fullview
FAILING COUNCILS WARNED
The national executive, working with provincial government is determined to arrest the current situation and turn the Ditsobotla Local Municipality as well as other municipalities in the North West.
This, so that municipalities can once again deliver consistent services and enjoy the respect of communities.
This was the commitment made by President Cyril Ramaphosa during his opening remarks at the engagement between the National Executive and the North West Provincial Executive Council, held in Rustenburg, on Friday.
Ramaphosa stressed that elected leaders had a duty to serve the people above personal interests, warning against the erosion of basic rights through poor service delivery.
“We were all elected to serve the people and not our own interests. Failure to deliver services is an infringement of the basic rights of residents and our citizens more broadly. No one should go more than a day without running the water while there is a deafening silence from the municipal offices about when the water will be restored.”
Ramaphosa addressed the issue of water, following recent water protests in several communities, including Westbury and Coronationville in Gauteng, where residents took to the streets demanding consistent water supply and accountability from municipalities. – SAnews
BIKO INQUEST REOPENED
The National Prosecuting Authority (NPA) has announced the enrolment of the reopening of the inquest into the death of anti-apartheid activist and Black Consciousness Movement founder and leader, Stephen ‘Steve’ Bantu Biko.
“The reopening of the inquest follows the Department of Justice and Constitutional Development Minister’s approval of the National Director of Public Prosecutions’ request, which was supported by the legal representatives of the Biko family,” the NPA said.
The revered activist was murdered while in apartheid police custody some 48 years ago after his arrest at a roadblock.
“Biko was arrested with his comrade, Peter Jones, at a roadblock near Grahamstown [Makhanda] on August 18, 1977.
“He was taken to Walmer Police Station in Port Elizabeth [Gqeberha], where he was allegedly tortured while shackled with leg irons and kept naked in a cell.
“On September 11, 1977, he was loaded, unconscious, still naked and shackled, into the back of a police Land Rover and transported to a prison hospital in Pretoria, 1 200 kilometres away. He died on September 12, 1977,” the NPA said.
His death was declared to have been caused by extensive brain damage and acute kidney failure and uremia.
Members of the notorious police Special Branch told the inquest that Biko had “sustained injuries when he banged his head against the wall”- a version that was accepted by Chief Magistrate MJ Prins. – SAnews
MAYOR’S WATER PROMISE
City of Johannesburg Executive Mayor Dada Morero has promised Westbury residents that water supply will be restored within seven days.
Residents are protesting the water supply interruptions caused by maintenance work being carried out by Johannesburg Water.
Morero said the community would have a full supply of water after seven days, but this would require “throttling” other surrounding areas during the night to bring water levels back to normal.
“This is what I am reporting from the discussions I have had with Joburg Water so that we ensure that there is no interruption of water post the seven days.
“The problem is that the water infrastructure in what they call the Commando Road System has been badly affected and badly damaged, which requires refurbishment. We have since put aside a budget of R800m focusing on this area so that we can resolve once and for all the water challenges in your area.”
The city will be supplying 15 water tankers in the area. The residents refused to listen to the solutions and also rejected the water tankers, saying they would cause more problems.
Joburg Water MD Ntshavheni Mukwevho said that the city’s bulk water infrastructure was in urgent need of refurbishment. – Lehlohonolo Lehana.
