08/05/2018 06:01 SAST | Updated 08/05/2018 06:01 SAST

Municipalities In Crisis: 112 Councils Cannot Pay Their Bills

Finance minister Nhlanhla Nene says at least 40% of municipalities have unfunded budgets, and only 14 of these have financial recovery plans.

Joshua Roberts / Reuters
South African Finance Minister Nhlanhla Nene takes part in a discussion on "Challengers of Job-Rich and Inclusive Growth: Growth and Reform Challenges" during the World Bank/IMF Annual Meeting in Washington October 8, 2014. REUTERS/Joshua Roberts (UNITED STATES - Tags: POLITICS BUSINESS)

More than 40% of municipalities, 112 of them, cannot afford to carry out service delivery for this financial year, Eyewitness News (EWN) reported. Finance minister Nhlanhla Nene reportedly said this in a written reply to a Parliamentary question posed by the DA.

This reportedly means that these municipalities will not be able to pay for their expenditure when the financial year ends at the end of June. Most of these are in Limpopo, followed by the Northern Cape and KwaZulu-Natal.

These municipalities will not be able to pay their creditors within the required 30 day period, he reportedly said, according to the reply published by PoliticsWeb.

Only 14 municipalities have financial recovery plans, Nene reportedly said. Municipalities are required to do this in the event that they cannot meet their financial obligations, and it means asking for help from the provincial and national treasuries.

Nene reportedly said that in terms of the Municipal Finance Management Act (MFMA), the provincial executives are supposed to take certain steps to help these municipalities, failing which the national treasury can step in. He said he would meet with the minister of cooperative governance to consider steps to assist these municipalities.

The DA's Kevin Mileham told EWN that it was clear the municipalities either could not collect revenue, had revenue bases that were too small, or were not controlling their expenditure.

He reportedly said there had been a "complete lack of intervention" by provincial and national Cabinet to address the situation.

Addressing the Gordon Institute of Business Science in April, Nene said South African cities could not be allowed to fail, Fin24 reported.

"Cities are key to how we build a prosperous South Africa.

"South Africa is close to 70% urbanised and still growing, the assessment of the contribution shows that 80% of our GDP comes from our cities," Nene said.