National Treasury moves to direct intervention as 63% of municipalities face financial distress

FINANCE Minister Enoch Godongwana on Wednesday announced a decisive shift in the government's approach to struggling municipalities, signalling a move from oversight to active structural intervention to address deepening governance, financial and service delivery failures at the local level.

- SIPHELELE DLUDLA

THE intervention comes as South Africa grapples with a widespread water supply crisis, largely attributed to poor infrastructure maintenance, weak governance systems and ineffective credit control measures within municipalities. I BHEKIKHAYA MABASO Independent Newspapers

The intervention comes as South Africa grapples with a widespread water supply crisis, largely attributed to poor infrastructure maintenance, weak governance systems and ineffective credit control measures within municipalities. With local government elections looming later this year, stabilising municipalities is also seen as critical to curbing rising service delivery protests.

While tabling the 2026 National Budget Review in Parliament on Wednesday, Godongwana said the National Treasury identified weak revenue collection, poor credit control, and a lack of financial discipline as the key factors in municipal financial instability.

According to the Budget Review documents, rising electricity and water input costs intensify financial pressures. However, the accumulation of arrears largely reflects failures to bill accurately, collect revenue consistently, and ring-fence and remit collections for bulk services.