Officials from the Treasury and the department of water and sanitation reported to parliament that municipal debt to water boards had reached R25.1bn — comprising R21.9bn in principal and R3.2bn in accrued interest.
The disclosure was made during a joint briefing to the portfolio committee on water and sanitation.
The Treasury confirmed that local government equitable share transfers had been withheld from defaulting municipalities across three consecutive quarters: December 2024, March 2025, and July 2025. The intervention was executed under the Division of Revenue Act and the Municipal Finance Management Act (MFMA), which permit the suspension of funds to organs of state that breach financial management obligations.
Transfers are reinstated only upon receipt of valid payment agreements or proof of settlement of current accounts.
Twenty-eight municipalities have now been flagged for escalated intervention. The Treasury indicated conditional grants may also be withheld pending compliance reviews. While Johannesburg, Tshwane and Mangaung have settled their debts, others — including Matjhabeng, Merafong and Emfuleni — remain non-compliant despite repeated engagement.
The intervention has led to R278m in recovered payments between July and August 2025 and is credited with stabilising water boards such as Magalies Water and Vaal Central Water.
The committee was briefed on the development of a joint oversight dashboard, led by the presidency in collaboration with the department of water and sanitation, the department of co-operative governance and traditional affairs, and the auditor-general. The dashboard will track municipal debt settlements, infrastructure progress and adherence to payment frameworks, and is expected to be piloted in the fourth quarter of 2025.
A debt write-off mechanism has also been approved, applicable only to municipalities that demonstrate consistent payment of current invoices and administrative recovery.
Speaking last week before the National Council of Provinces, Deputy President Paul Mashatile endorsed the intervention but cautioned against punitive framing. He cited ageing infrastructure, legacy billing failures and weak revenue collection systems, as structural contributors to the crisis.
“We do not want to be punitive, but where we realise that municipalities are not paying water boards and yet they are collecting revenue, that’s where that measure is being used to slice their budgets,” he said.
Mashatile linked the intervention to the district development model, describing it as a mechanism for co-ordinated planning and service delivery across all spheres of government.
The long-term significance of the intervention will depend on whether municipalities internalise payment discipline and whether systemic reforms particularly in billing, infrastructure and governance are implemented.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.