The Western Cape Government (WCG) has approved a section 139 intervention for the Theewaterskloof (TWK) Municipality, saying its financial position highlighted risks in the ability to deliver services to residents.
According to Finance MEC, Deidré Baartman, the intervention for TWK municipality is essential as it had “demonstrated prolonged financial instability, including mounting debt, severe cash flow issues, and challenges in revenue collection”.
Intervention conditions include the appointment of a financial administrator, the development of a financial recovery plan and regular monitoring and reporting mechanisms to ensure accountability.
WCG said the decision was made following extensive assessments and that the municipality's financial position rapidly declined between 2022 and early 2023.
In the 2022/23 financial year, the municipality consistently collected over 95% of its planned revenue and closed the year with a surplus, but by August 2024, the collection rate had dropped to 64%.
Problems were identified by March 2023, where the municipality's cash and cash equivalents regressed from R70.96 million on 31 August 2023 to R43.28 million by August 2024, this while commitments increased to R43.73 million.
“Theewaterskloof has demonstrated prolonged financial instability, including mounting debt, severe cash flow issues, and challenges in revenue collection. This has limited the municipality’s ability to fund service delivery, and its ability to procure goods, services, and credit. This intervention is, therefore, essential to restore financial stability, and to ensure the continuation of services,” said Baartman.
MEC for Local Government, Environmental Affairs and Development Planning, Anton Bredell, said: “I welcome this intervention as it is impossible to deliver quality services to our residents if the local authority’s finances are not sustainable. I want to urge the municipality to work with the Department of Local Government, Provincial Treasury as well as the team from National Treasury.”
On September 16, Bredell issued a section 136 notice to the municipality addressing concerns regarding its financial management and potential breaches of financial obligations.
According to WCG, despite municipal leaders denying allegations of material breaches of financial obligations in response to the notice, financial challenges and risks were evident.
TWK municipality spokesperson Tarren-Lee Habelgaarn referred enquiries to the province.
GOOD Party’s Brett Herron, said: “The timing of the financial stress is closely aligned to the political instability caused by the DA, ANC and FF+ voting to remove the Acting Municipal Manager from office, the collapse of the previous coalition and the administrative interference in electing a majority government. The new coalition should be elected into office this week.
“If we achieve that then I’m confident we will bring about financial and administrative stability.”
DA constituency head in TWK, Nicholas Myburgh, said the coalition government has “driven the TWK municipality to the brink of financial ruin, and basic services have suffered greatly”.
“The steps announced by the provincial government to intervene and guide TWK's recovery is welcomed by the DA.
“We see these as crucial to restoring financial sanity to the municipality. Of vital importance now is the restoration of democracy by the legal takeover of the TWK Council and the election of new executive office-bearers,” said Myburgh.
The ANC did not respond to enquiries by deadline.
Cape Times