By Gcina Ntsaluba
Residents of Makana Municipality face the prospect of worsening service delivery after National Treasury added the municipality to a list of chronic defaulters, effectively freezing government funding until outstanding tax obligations are settled.
The municipality owes R3.7 million to the South African Revenue Service (SARS) in unpaid statutory deductions, prompting Finance Minister Enoch Godongwana to invoke constitutional provisions that allow for the withholding of equitable share allocations and grants.
National Treasury has placed 39 municipalities, including Makana and Dr Beyers Naudé (Graaf Reinet), on notice that their 2025-26 equitable-share allocation will be suspended until they demonstrate full compliance with SARS, pension fund, and medical aid obligations.
Makana Citizens Front (MCF) leader Lungile Mxube warned in a 9 July complaint that the July tranche payment suspension would have “severe negative impact on service delivery” in a municipality already struggling with infrastructure collapse and service failures.
The funding crisis comes as Makana Municipality is already battling with multiple service delivery challenges, including water shortages, sewage spillages, and infrastructure decay. The potential loss of national funding threatens to accelerate the municipality’s decline.
“We cannot allow a situation where equitable share revenue is withheld due to a reckless conduct and behaviour of a Chief Financial Officer,” Mxube stated in his complaint to municipal leadership.
Statutory deductions
The crisis stems from the municipality’s failure to pay over statutory deductions taken from employee salaries but the funding suspension exposes deeper governance problems within Makana Municipality.
Mxube’s complaint alleges that contradictory information provided to the Auditor General by municipal officials and external lawyers suggests potential financial irregularities.
The municipality has also been criticized for employing expensive external legal services despite having qualified local professionals available, raising questions about financial prudence and transparency.
The Democratic Alliance has called for urgent provincial intervention, requesting that the crisis be added to the COGTA portfolio committee agenda. The party demands that both affected municipalities present funded repayment schedules within seven days.
“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,” said Retief Odendaal, the DA Shadow MEC for Co-operative Governance and Traditional Affairs (COGTA).
The funding freeze threatens service delivery across multiple Eastern Cape towns, including Graaff-Reinet, Aberdeen, Willowmore, and surrounding rural settlements. Water, sanitation, and electricity services could face further disruptions as cash flow problems mount.
The situation represents a critical test of local government accountability, with National Treasury using its constitutional powers to enforce financial discipline while communities bear the ultimate cost of municipal mismanagement.
