National Treasury has placed the Dr Beyers Naudé and Makana Local Municipalities on a list of thirty-nine chronic defaulters, warning that the first tranche of the 2025-26 equitable-share allocation, together with all associated grants, will be withheld until they prove full compliance with SARS, pension and medical-aid obligations.
These sanctions follow the Dr Beyers Naudé municipality’s failure to pay more than R15.1 million in statutory deductions to the South African Revenue Service and a further R8.9 million to the pension fund.
The Makana Local Municipality was flagged for a debt amounting to R3.7 million owed to SARS.
When a municipality deducts PAYE, UIF and other contributions from staff and then diverts that money elsewhere, it breaks the law, erodes employee morale and puts basic services at risk.
The cash shortfall now threatens the provision of water, sanitation, and electricity in Graaff-Reinet, Aberdeen, Willowmore, as well as Makhanda, Alicedale and surrounding rural settlements.
I have written to the chairperson of the provincial COGTA portfolio committee, Nomasikizi Konza, and asked that the crisis be added to the agenda of Thursday’s meeting. In the letter, I have also requested a briefing from the municipalities regarding their arrears and cash-flow position, together with an explanation from the MEC for COGTA, Zolile Williams, of the steps that will be taken should the municipalities fail to restore compliance.
I will also request that the committee demand a funded repayment schedule from the two municipalities within seven days of the presentation.
Download letter.
If the Dr Beyers Naudé and Makana municipalities do not present a credible plan, and if essential services are under immediate threat, the provincial executive must consider mandatory intervention in accordance with Section 139 of the Constitution.
Communities cannot be expected to suffer because funds that belong to SARS and municipal workers have been misused.
The Democratic Alliance remains committed to promoting transparent and accountable governance.
Residents of Eastern Cape municipalities deserve councils that pay the bills and deliver reliable services. We will continue to press for urgent action so that we can get the Eastern Cape working again for all who live in it.