Thirty-eight municipalities classified as distressed, Hlabisa tells Parliament

Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa informed Parliament that 38 municipalities are currently classified as financially distressed as of August. These municipalities are receiving targeted support through the Municipal Performance Turnaround Strategy and section 154 support measures. Hlabisa did not disclose the names of the affected municipalities, but mentioned that they face challenges in governance, finances, institutional capacity, and service delivery.

Hlabisa highlighted that the Constitution mandates national and provincial governments to aid municipalities in managing their affairs, exercising their powers, and fulfilling their duties. Provinces can step in when municipalities fail to meet executive obligations. The interventions vary based on the severity and nature of the municipal issues.

The Department of Cooperative Governance assesses municipal performance through different strategies and programmes, such as the Municipal Performance Turnaround Strategy. When municipal failures are severe, and provincial support is inadequate, the provincial executive can intervene under section 139 of the Constitution.

Out of the 38 distressed municipalities, 37 are currently receiving interventions under section 139. These municipalities include four in the Western Cape (Beaufort West, Kannaland, Garden Route, and Theewaterskloof), one in KwaZulu-Natal (Impendle), two in Gauteng (Emfuleni and Merafong), eight in the Free State (Mangaung, and five each in the Eastern Cape, Limpopo, Mpumalanga, and North West), and three in the Northern Cape.

Seven of the 38 distressed municipalities improved their audit outcomes during the 2024/25 audit cycle, while 28 remained unchanged, and two regressed. Thirty-five of these municipalities have adopted Municipal Support and Improvement Plans or Financial Recovery Plans to guide and monitor their turnaround interventions.