More than 100 of the country’s municipalities were financially distressed, said Co-operative Governance and Traditional Affairs (Cogta) Minister Velenkosini Hlabisa.
It also emerged, when Hlabisa responded to oral questions in the National Assembly on Wednesday, that government departments owed the cash-strapped councils a whopping R21 billion in rates and services.
The Treasury classified 157 municipalities as financially distressed. He said Cogta classified 61 municipalities as being financially viable and not distressed, but 161 were at risk.
The minister also said government departments should play a major role in assisting municipalities to be taken out of their dysfunctional financial status.
“This will set a good example to ordinary citizens that the government is paying, that business is paying and this will assist our municipalities to be out of financial distress.”
Hlabisa said the Cabinet had since appointed an inter-ministerial team (ITM) to identify measures to be taken to turn around the financial situation at the troubled councils.
Working with the South African Local Government Association and the Municipal Demarcation Board, he said the ITM would look at the funding model, especially for councils that could not be financially sustainable on their own and how they should be funded differently.
“There must be a revisiting of other municipalities where it is viable to keep them or re-demarcate and make them belong to where they will be viable in order to make services reach the people of our country. We will revisit the demarcation of some municipalities that have no revenue base,” he said.
Hlabisa dismissed a suggestion that the amalgamation of municipalities and creating big units would lead to distressed councils.
The IMT would categorise the dysfunctional municipalities when it produced a turnaround plan.
“The 35 dysfunctional municipalities will be our first focus point. You have 10 worst-performing municipalities and you have 12 that got a disclaimer.”
Cape Times