South African municipality wants R23 billion to disappear into thin air

The National Treasury has sent two letters to the Acting City Manager of the Nelson Mandela Bay Metropolitan Municipality regarding an attempted R23 billion write-off.

This was revealed by the Minister of Finance, Enoch Godongwana, in response to a parliamentary inquiry from National Assembly member Farhat Essack.

Essack had asked the Minister what steps the National Treasury had taken to prevent the municipality from using an unlawful write-off to meet compliance conditions before the 30 September deadline.

The write-off in question involves R23 billion in unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE), which it had incurred between 2009 and 2021.

The municipality reportedly attempted to write off the entire amount unlawfully without first investigating each item individually, as required under section 32 of the Municipal Finance Management Act (MFMA).

In his response, Godongwana said the National Treasury was continuing to engage with the Nelson Mandela Bay municipality over matters relating to its UIFWE.

This included sending two letters to the Acting City Manager, Lonwabo Nqoqo, regarding the proposed write-off of the balances.

“The municipality had until 30 September 2026 to process UIFWE and demonstrate a reduction of the total balance by 25%,” Godongwana said.

“The municipality is required to submit progress reports, including evidence to support any reduction.”

Once this information had been received, Godongwana said the Treasury would undertake a comprehensive assessment of the municipality’s UIFWE processes and decisions.

These will be weighed against the requirements set out in section 32 of the MFMA to determine if the municipality appropriately investigated the relevant transactions.

It will also reveal whether the municipality determined applicable liabilities and complied with legislative requirements regarding the recovery, condonation, write-off, or certification of UIFWE.

In addition, the Treasury will assess whether there was any non-compliance with section 32 of the MFMA, including potential financial misconduct or offences.

However, Godongwana said the Treasury would refrain from expressing a definitive view on the matter until all relevant information had been provided.

“Should evidence emerge that points to non-compliance, the National Treasury will consider the appropriate steps and referrals in accordance with the legislative and regulatory framework,” Godongwana said.

“The National Treasury will continue its engagement with the municipality and will take the outcome of its assessment into account in determining any further action required.”

Nelson Mandela Bay councillor Gert Engelbrecht previously said the matter had been rushed to council without the proper scrutiny and investigation.

Council members were reportedly only allowed 30 minutes to consider documentation regarding the write-off, while a 500-page supporting affidavit was not even presented.