RUSTENBURG HERALD - RUSTENBURG - Notwithstanding the fact that the Rustenburg Local Municipality (RLM) has been faced by a rather desperate situation with regard to its continuing struggle against municipal arrears amounting to very close to R5.3 billion (if not more) as result of a culture of non-payment since 1994, the municipality is currently at risk of jeopardising its December 2025 equitable share allocation of some R940 000 000 by the National Treasury.
In a strongly-worded letter written by the Deputy Director General: Intergovernmental Relations at the National Treasury and directed to the RLM’s Municipal Manager (Adv Ashmar Khuduge), the Rustenburg Municipality was notified of the National Treasury’s intention to withhold the allocation of RLM’s equitable share for December 2025 as a result of several examples of non-compliance relating to the Municipal Finance Management Act (MFMA (Act No. 56 of 2003).
These contraventions which include “the Rustenburg Municipality’s persistent failure to address unauthorised, irregular and fruitless and wasteful expenditure (UIFWE) and to implement consequence management” have prompted the National Treasury’s intention to invoke section 216(2) of the Constitution of the Republic of South Africa, which provides for a resolution to withhold said equitable share allocation - an amount that would in all probability exceed R1 billion. (The total equitable share allocated to the Rustenburg Municipality in 2020 was R941 352 000). In the letter explaining the background of National Treasury’s resolution, Ms Ogalaletseng Gaarekwe - Deputy Director General: Intergovernmental Relations at the National Treasury wrote:
Background
“In December 2024, the National Treasury, through MFMA Circular 129, requested municipalities to develop an action plan, setting out a plan to process the UIFWE balances up to 30 June 2024 by 31 August 2025. Section 32 of the Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003 – ‘MFMA’), read with Regulation 74 of the Municipal Budget and Reporting Regulations, outlines the process that the Municipality must follow to address the UIFWE that is on the Municipality’s books. Additionally, the plan of action should have outlined the process for establishing and appointing members of the disciplinary board, as well as addressing the backlog of financial misconduct referrals to the disciplinary board.”
“This relates to the implementation of consequence management in line with Chapter 15 of the MFMA, read with the Municipal Regulations on Financial Misconduct Procedures and the Criminal Proceedings, 2014 (Financial Misconduct Regulations). One of the key requirements of the Financial Misconduct Regulations is the establishment of a disciplinary board to investigate allegations of financial misconduct against municipal officials. The National Treasury has developed the following criteria to assess the Municipality’s compliance with section 32 as well as Chapter 15 of the MFMA and the Financial Misconduct Regulations”, she continued.
Non-compliance to MFMA
• The Municipality’s UIFWE balance as at 30 June 2024 has not decreased by 75% in the unaudited 2024/2025 AFS submitted to the Auditor-General South Africa for audit; or its intention to invoke Section 216(2) of the Constituion of the Republic of South Africa 1996, due to non-compliance with the local government Municipal Finance Management Act.
Further examples of non-compliance of the MFMA
• The Municipality did not have a disciplinary board in place as at 30 June 2025; or
• Notwithstanding the Municipality having a disciplinary board in place, not all UIFWE matters have been referred to the disciplinary board during the 2024/2025 financial period; or
• The Municipality has not instituted disciplinary measures stemming from the UIFWE incurred up to 30 June 2024 in the 2024/2025 financial year. Using the audited 2023/24 and unaudited 2024/25 annual financial statements, a year-on-year review of the UIFWE disclosure notes shows no significant reduction in Rustenburg Municipality’s 2023/24 UIFWE balances.
During the 2024/2025 financial year, the Municipality has written off R293 621 (4,41%) of its irregular expenditure that stood as at 30 June 2024. No unauthorised and fruitless and wasteful expenditure amounts were processed during the year under review. The Municipality did not recover any amounts related to its UIFWE balance. The reduction of the UIFWE as indicated above as at 30 June 2025, is significantly below the 75% reduction criterion as outlined above. Furthermore, the Municipality is not implementing consequence management, though it has managed to reduce some of the 2024/25 UIFWE total balance.
Previous engagements
The National Treasury has on several occasions engaged the Municipality regarding this matter. This includes engagements with the MPAC including a session which was held on 21 August 2024. During these engagements, it became apparent that the MPAC fully understands its roles and responsibilities when it comes to the process outlined in section 32 of the MFMA. The process outlined in section 32 of the MFMA does not involve a forensic investigation. The administration must compile all the necessary reports in line with section 32 of the MFMA read with regulation 74 of the Municipal Budget and Reporting Regulations. In conclusion, RLM was instructed to provide reasons why the National Treasury should not invoke section 216(2) of the Constitution within 14 days of receipt of this letter whereafter the matter would be reconsidered.
Media enquiry
Rustenburg Herald has since sought official comment by the Rustenburg Municipality on the matter. In her response, Rustenburg’s Executive Mayor by means of the Communicatons Unit, responded as follows:
Municipality’s response
In response to the matter of the National Treasury’s intention to withhold the December 2025 equitable share allocation, the Rustenburg Local Municipality acknowledges the concerns raised regarding unauthorized, irregular, and fruitless and wasteful expenditure (UIFWE). The municipality is working tirelessly to address the issues raised by National Treasury.
The Executive Mayor, Cllr Shiela Mabale-Huma has read and noted the letter from National Treasury and is ensuring that the necessary action is taken to rectify the situation, including the adoption of corrective measures to fix financial mismanagement and the appointment of independent external auditors to investigate and clear the backlog of irregular, unauthorised, fruitless, and wasteful expenditure cases. Consequence management will be instituted, once the report has gone to Council, if necessary. The Executive Mayor assures that consequence management will be applied in line with the MFMA circular - 121-consequence management and accountability framework, 2022. It is important and worth noting that the municipality is committed to resolving the matter and ensuring that the equitable share allocation is not withheld. The municipality is continuously engaging with National Treasury and will fully comply and implement the necessary corrective measures.
The municipality appreciates your inquiry and will provide further updates once the matter has been resolved.
Issued by:
Communications Unit Office of the Executive Mayor Rustenburg Local Municipality
