Civil society warns funding freeze could hit residents hardest

The Nelson Mandela Bay Civil Society Coalition has warned that National Treasury’s decision to withhold an equitable share tranche risks worsening failing service delivery in the city.

National Treasury has temporarily withheld Nelson Mandela Bay Municipality’s July equitable share allocation, citing persistent financial mismanagement, weak governance and repeated failures to comply with the Municipal Finance Management Act (MFMA).

The metro, which is due to receive R1.74bn in equitable share funding during the 2026/27 financial year, is among dozens of municipalities nationwide facing sanctions after failing to curb unauthorised, irregular, fruitless and wasteful expenditure (UIFWE), implement consequence management and maintain basic financial discipline.

Buffalo City, Sundays River Valley, Makana, Inxuba Yethemba and Port St Johns are among the other Eastern Cape municipalities affected.

Nelson Mandela Bay Civil Society Coalition chair Monga Peter said public funds cannot continue to be disbursed without accountability, and municipalities that have become synonymous with corruption, financial mismanagement, unfunded budgets and reckless governance cannot simply expect business as usual.

“However, while the intention of strengthening fiscal discipline is understandable, we are deeply concerned about the devastating consequences this decision will have for ordinary residents, who are already paying the price for years of governance failure.

“In Nelson Mandela Bay, households and businesses continue to endure deteriorating service delivery, unreliable infrastructure, water and sanitation failures, electricity challenges, pothole-ridden roads and declining municipal performance.

“The people of this metro have become victims of systemic governance failures that were never of their making.”

He said the withholding of the funding risks further undermining the municipality’s ability to deliver basic services, ultimately punishing communities rather than those responsible for creating the crisis.

“The consequences will not be borne by politicians, municipal managers or senior officials.

“They will be borne by pensioners, unemployed residents, working families and businesses already struggling under mounting economic pressure.

“The Coalition is equally concerned that National Treasury’s intervention addresses only one aspect of the problem. Fiscal discipline alone will not resolve the deep-rooted governance crisis confronting municipalities such as Nelson Mandela Bay.

“The continued deterioration of Nelson Mandela Bay is not solely the result of municipal failures.

“It also reflects the failure of the provincial and national departments of co-operative governance and traditional affairs to exercise their constitutional oversight responsibilities.”

He said warning signs had been ignored for years while political instability, administrative dysfunction, weak leadership, corruption and financial mismanagement had become entrenched.

“The metro did not arrive at this point overnight. It has deteriorated under the watch of institutions specifically mandated to prevent municipal collapse.

“If Treasury is prepared to exercise its constitutional authority by withholding funds, then the same determination must be shown in holding individuals personally accountable for the financial and administrative collapse of municipalities.

“Municipal managers, chief financial officers, accounting officers and political office bearers responsible for violating the Municipal Finance Management Act should face decisive consequences, including disciplinary action, civil recovery of financial losses and criminal prosecution where evidence warrants it.

“Treasury’s intervention should therefore mark the beginning, not the end, of comprehensive reform. The metro cannot be allowed to drift further into institutional decline while residents shoulder the burden of failures committed by those entrusted to govern.”

Municipal spokesperson Sithembiso Soyaya said the municipality wanted to assure residents, businesses, investors and stakeholders that the intervention was administrative and does not constitute a declaration that the city is financially insolvent or incapable of delivering services.

“The National Treasury has further indicated that the temporary withholding is intended to promote compliance with the Municipal Finance Management Act (MFMA) and strengthen financial governance.

“The municipality respects the constitutional and legislative oversight role of the National Treasury and remains fully committed to working collaboratively with both the National Treasury and the Provincial Treasury to satisfy all conditions required for the release of the temporarily withheld allocation.”

He said the municipality had already started implementing a comprehensive programme of financial governance reforms to strengthen compliance with the MFMA.

“The city is also prioritising the improvement of its financial sustainability through strengthened revenue management, expenditure controls, enhanced governance systems and improved oversight by council and its oversight structures,” Soyaya added.

He said internal governance processes had been activated to address issues raised by the National Treasury.

“The municipality further wishes to reassure communities that every effort is being made to minimise any potential impact on municipal operations and service delivery.

“Essential services, including water, sanitation, electricity, waste management, emergency services and other frontline municipal services, remain the municipality’s highest priority.”