South African Government Departments Accrue R18.6bn in Debt to Municipalities

In a striking revelation, Finance Minister Enoch Godongwana has confirmed that South African national and provincial government departments are embroiled in substantial debt to local municipalities, accumulating to a staggering R18.6 billion. This monetary burden has been a point of contention with department offices experiencing service cut-offs.

The Gauteng region tops the charts, with municipalities there awaiting over R3.5 billion. Following closely are Free State and KwaZulu-Natal (R3.2 billion), and Mpumalanga (R2.1 billion), marking a pervasive issue across the nation. Conversely, Western Cape municipalities seem to be in a relatively better position with only R345 million owed.

Debt is notably significant within departments such as public works, agriculture, education, and health. Specifically, in Gauteng, a glance at the figures reveals that the national public works department alone owes municipalities in excess of R2 billion. Moreover, the situation mirrors in KZN and Free State, with their respective provincial public works departments indebted by over R1.6 billion and R1.2 billion.

The urgency of the issue has prompted Gauteng Premier Panyaza Lesufi to take a stand - advocating municipalities to act decisively by discontinuing services if payment is not received. The pursuit of self-sustainability for municipalities is emphasized so that they can adequately handle their finances without the burgeoning risk of falling into debt.

However, the consequences of severing services can be dire, affecting essential service delivery. Not to mention, the cost implications of legal battles and settlements. Highlighting this is the concern around the Department of Health, which faces its own crisis with legal claims. The Auditor-General's report detailed payments of R1.45 billion towards medical litigation in the 2022-2023 financial year, with the department disclosing R1.3 billion spent on legal proceedings and an overwhelming R23.6 billion on litigation claims from January 2020 to the end of 2023.

These worrying statistics signal the potential jeopardy of department assets being seized, further endangering the provision of care to vulnerable populations. To combat these risks, Minister Dr. Aaron Motsoaledi reports that steps have been taken, including a collaboration with the National Treasury to earmark budgets for legal claims settlements in every province, bolstering compliance with court orders, and protecting assets from attachment or seizure.

This strategic move is part of broader efforts to streamline the fiscal responsibility of government departments and ensure the solvency of municipal administrations, ultimately aiming to improve the financial health and service delivery stability in South Africa.