THE High Court in Bloemfontein has ruled against the Matjhabeng Local Municipality for severe breaches of its constitutional duties, following an application by the Democratic Alliance (DA).
Judge Van Rhyn found the municipality failed to provide essential services, promote development and maintain a safe environment, declaring its conduct unconstitutional.
The Premier of the Free State and other government officials were also found to have neglected their duty to intervene.
The court ordered immediate intervention and the creation of a financial recovery plan, mandating compliance within seven days to address the municipality’s dire financial and service-related crises.
The DA’s application argued that the Matjhabeng Local Municipality, which includes Welkom, Virginia and several other towns, was in persistent breach of its responsibilities under sections 152 and 153 of the Constitution.
Specifically, it alleged that the municipality was unable to deliver basic services to residents, such as water, electricity and sanitation, and had failed to prioritise essential community needs in its planning and budget management.
An audit by the Auditor General painted a grim picture of the municipality’s financial state.
The municipality’s liabilities now exceed its assets by over R4 billion, and it reportedly lost R1.1 billion in the fiscal year ending in June 2023.
Significant unpaid debts to Eskom and Bloem Water, amounting to nearly R11 billion combined, were flagged as critical risks.
The audit also revealed losses of R89 million due to electricity network issues and R239 million in water losses from ageing infrastructure.
Fruitless and wasteful expenditures were recorded at R340 million, with irregular spending due to non-compliance with supply chain regulations amounting to R146 million.
The AG concluded that the Matjhabeng Local Municipality’s financial instability was so severe that it may no longer be viable as a going concern.
Judge Van Rhyn’s ruling directed the Premier, MEC for Human Settlements, Cooperative Governance and Traditional Affairs and the Free State Provincial Executive to immediately intervene under section 139(5) of the Constitution, implementing measures to restore financial stability.
If the provincial officials fail to act within seven days, the Minister of Cooperative Governance, the President, and the National Executive will be required to step in.
Additionally, a comprehensive financial recovery plan must be filed with the court within six months.
To address the financial crisis, the court also mandated that, if necessary, the Matjhabeng Local Municipality’s council may be dissolved, with an administrator appointed until a newly elected council assumes office.
If the municipality cannot pass the required budgets and recovery measures, the national and provincial authorities must take over the implementation of the recovery plan, ensuring that essential services continue to be provided to residents.
In a statement, the DA criticised the lack of action by provincial and national government officials, pointing to the continued deterioration in municipal services and financial management.
Despite the council’s efforts to intervene and manage escalating service delivery issues, Judge Van Rhyn noted that sufficient progress had not been made and that the local community continued to suffer from the prolonged financial mismanagement and neglect of infrastructure.
The Matjhabeng Local Municipality’s financial crisis is not isolated.
Widespread issues of unpaid debts to service providers, ineffective billing systems and decaying infrastructure reflect a national challenge in local government management.
Judge Van Rhyn highlighted that under South African law, provincial and national governments must intervene when municipalities cannot fulfil their constitutional obligations.
This judgment is likely to serve as a benchmark for addressing municipal crises across South Africa. – Staff Reporter