Government backs 38 distressed municipalities but denies election-specific funding Hlabisa

National government is providing financial and technical support to 38 financially distressed municipalities, but those interventions are being delivered through existing programmes rather than a separate, election-specific allocation, Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa said.

Support through existing programmes, not an election fund

Hlabisa told parliament that the 38 municipalities identified as distressed are receiving assistance via the Department’s current municipal support and turnaround measures, including the Municipal Performance Turnaround Strategy (MPTAS), which is overseen by a Cabinet-established Inter-Ministerial Committee.

“These measures are not funded through a separate election-specific allocation but are implemented through the Department’s existing municipal support and turnaround programmes,”

He made clear that no dedicated, ring-fenced funding linked to the 4 November local government elections has been provided to address those municipalities’ financial and service-delivery problems.

“No single allocation exists for this purpose, as the Department’s support measures are not funded through a ring-fenced election-specific allocation,”

What support is being used

The support is being channelled through established mechanisms such as the Municipal Infrastructure Grant and other transfers administered under the Division of Revenue Act and the Municipal Finance Management Act. A Schedule 6B Municipal Infrastructure Grant allocation of R535.566 million has been set aside for municipalities requiring infrastructure implementation support.

Hlabisa said the department is also collaborating with National Treasury on municipal debt-relief measures, including assistance for qualifying municipalities carrying historical Eskom debt.

Progress and the scale of the challenge

The Auditor-General’s 2024/25 municipal audit cycle shows limited improvement among the distressed group. Of the 38 municipalities assessed during that cycle, seven had improved, 28 remained unchanged, two regressed, and one audit had not been finalised by the legislated reporting date, Hlabisa said.

By August 2026, 35 of the 38 municipalities had adopted either Municipal Support and Intervention Plans or Financial Recovery Plans. Hlabisa also said Municipal Infrastructure Grant expenditure had improved in the majority of these municipalities compared to the previous financial year.

Examples of interventions and outcomes

Hlabisa highlighted several municipalities where interventions have shown results. In Enoch Mgijima, a smart-meter rollout produced an estimated R36 million positive impact on revenue and the municipality recorded 100% expenditure of its Municipal Infrastructure Grant. In Emfuleni, a Financial Recovery Plan supported service-delivery improvements, including a special-purpose vehicle with Rand Water to address water infrastructure maintenance.

Ditsobotla, which is under a national section 139 intervention, has recorded improvements in governance, infrastructure-grant spending and salary stability, although the department noted that significant challenges remain.

Continuity through the election period

Hlabisa said the department’s measures would continue through the election period and into the transition to newly elected councils, with interventions escalated where necessary to protect basic services.

“These measures are intended to safeguard service continuity, strengthen municipal institutions and support a stable transition before and after the 2026 Local Government Elections,”

The department is preparing a joint circular with National Treasury to strengthen how section 139 interventions are invoked, implemented and monitored before and after the elections.