MOPANI DISTRICT, LIMPOPO — The Mopani District Municipality is currently navigating a severe financial bottleneck after the National Treasury withheld its equitable share allocation for July. With more than R300 million in crucial funding blocked, Mayor Pule Shayi has publicly addressed the crisis, defending the local authority’s operational stability while acknowledging the stringent consequences of historical financial mismanagement.
The funding freeze is part of a broader, aggressive fiscal enforcement strategy by the National Treasury. Across South Africa, 69 municipalities failed to receive their equitable share allocations this month. This includes 11 local authorities in the Northern Cape. Highlighting the severe financial distress plaguing some of these entities, the Thembelihle Local Municipality in Hopetown recently received a qualified audit report for the 2023/24 financial year. That municipality overspent its budget by a staggering 186%, with nearly half of its expenditure classified as fruitless and wasteful.
However, Mayor Shayi insists that Mopani’s current operational reality is vastly different from its historical ledger. While the municipality faces a massive budget deficit of R2.4 billion, alongside debts of over R300 million owed to Lepelle Northern Water and R384 million to the Department of Water and Sanitation (DWS), the Mayor attributes these figures to the past.
According to Mayor Shayi, the R2.4 billion shortfall is the direct result of a comprehensive historical financial investigation covering the decade between 2009 and 2019, which was conducted in agreement with the Auditor-General. He maintains that over the last four to five years, the municipality has stabilized its cash flow, consistently generated sufficient revenue, and reliably paid its creditors for bulk water purchases.
The specific trigger for the July withholding of the R300 million equitable share stems from Section 32, Subsection 2 of the Municipal Finance Management Act (MFMA). This legislation mandates that municipalities must thoroughly investigate instances of unauthorised, irregular, fruitless, and wasteful (UIFW) expenditure, apply strict consequence management, and recover lost funds. The National Treasury based its withholding decision on the municipality’s previous Annual Financial Statements (AFS) and audit reports, which flagged significant UIFW irregularities.
In response to the Treasury’s directives, Mayor Shayi detailed the extensive remedial actions taken by the municipality. Municipal management launched internal investigations, the Financial Misconduct Board presented formal recommendations, and independent investigators were appointed to handle the allegations.
These consequence management measures have yielded tangible results. Mayor Shayi confirmed that seven officials have been fired, while others opted to resign. Most notably, this disciplinary sweep includes the institution’s former Chief Financial Officer (CFO), who was officially dismissed earlier this year following a formal disciplinary process.
Despite these corrective measures, the immediate withholding of R300 million is already sending shockwaves through local service delivery. Mayor Shayi outlined several critical areas that will be directly impacted by the cash shortfall. These include the bulk purchasing of water from Lepelle Northern Water and the DWS, petrol allowances for municipal staff, and the payment of salaries for employees, including those in the Expanded Public Works Programme (EPWP). Furthermore, subsidies for indigent residents relying on free basic services, as well as payments to Eskom for energizing local boreholes, will be severely strained.
The Mayor did offer some reassurance regarding capital projects, noting that specific conditional grants—namely the Municipal Infrastructure Grant (MIG), WISK, and other direct allocations—remain unaffected by the equitable share freeze.
Looking ahead, Mayor Shayi expressed strong confidence that the standoff with the National Treasury will be resolved swiftly. He noted that all substantive evidence, investigation reports, and proof of consequence management have been submitted to the Treasury. Following ongoing engagements and active fact-verifications taking place, the municipality remains optimistic that the national government will be satisfied with their compliance and release the withheld funds in accordance with the MFMA.