--- title: "Déjà vu in the Bay — NMB again faces funding cutoff amid governance chaos" description: "Nelson Mandela Bay is staring down a financial precipice as the National Treasury threatens to halt grant transfers. After missing a March deadline for required documents, the municipality has been handed a final ultimatum: comply or lose essential funding." type: "NewsArticle" publisher: "Daily Maverick" site: "https://www.dailymaverick.co.za" section: "ACCOUNTABILITY FAILURE" author: "Andisa Bonani" author_url: "https://www.dailymaverick.co.za/author/andisa-bonani/" canonical_url: "https://www.dailymaverick.co.za/article/2026-04-21-deja-vu-in-the-bay-nmb-again-faces-funding-cutoff-amid-governance-chaos/" published: "2026-04-21T21:58:55" updated: "2026-04-22T08:34:20" lang: "en-ZA" word_count: 1396 --- # Déjà vu in the Bay — NMB again faces funding cutoff amid governance chaos > Nelson Mandela Bay is staring down a financial precipice as the National Treasury threatens to halt grant transfers. After missing a March deadline for required documents, the municipality has been handed a final ultimatum: comply or lose essential funding. By Andisa Bonani · Published 21 April 2026, 23:58 SAST · Updated 22 April 2026, 10:34 SAST ## Key points - Nelson Mandela Bay faces the potential loss of National Treasury grants due to missed deadlines and inadequate financial governance documentation. - The municipality has been warned about persistent mismanagement and ongoing unauthorised expenditure, risking funds if issues aren't resolved by 30 April. - Urgent council meetings are under way as the local government’s failures have prompted intervention from the national Department of Cooperative Governance. - Concerns from civil society and business leaders highlight a trust deficit, political infighting, and the need for genuine collaboration to improve governance and service delivery. ## Content Nelson Mandela Bay is once again at risk of losing National Treasury grant funding after missing a March deadline to submit key governance documents, with a final cut-off set for 30 April. The National Treasury has warned it may suspend transfers of the money if the municipality continues to fall short on financial management and compliance obligations, including its failure to adequately address persistent unauthorised, irregular, fruitless and wasteful expenditure. An urgent special council meeting was called for Wednesday after senior officials, including [an intervention team operating under section 154 of the Constitution](The intervention of the national Department of Cooperative Governance and Traditional Affairs \(Cogta\) in Nelson Mandela Bay was met with scepticism by the Coalition of Civil Society, which stated it was the fourth intervention in recent years, with none yielding the desired results. Cogta assigned a 10-member team in terms of section 154 \(1\) of the Constitution to the city council on Thursday, in a bid to assist the city to improve governance and unlock service delivery. On Friday, Cogta Minister Velenkosini Hlabisa hosted the Coalition of Civil Society, which comprises Nelson Mandela Bay’s business sector, non-profit organisations, the church and others, at the Boardwalk Hotel and Convention Centre. advertisement Don’t want to see this? Remove ads The engagement followed a 26 September meeting with Cogta, the municipality and the coalition, where issues related to service delivery and the exclusion of the coalition were raised. IFP leader Velenkosini Hlabisa has urged parties involved in GNU talks to move forward in the best interests of the country. \(Photo: Sharon Seretlo / Gallo Images\) IFP leader and COGTA Minister Velenkosini Hlabisa. \(Photo: Sharon Seretlo / Gallo Images\) Hlabisa said some of the problems in municipalities were due to incompetent people in the administration and political office. “All political parties have now conceded that cadre deployment is one way of destroying all spheres of government,” said Hlabisa. “Cadre deployment has destroyed all spheres of government; people must be deployed on the basis of being fit for purpose, from the administration to the politicians.” As such, Hlabisa said they were working on a Bill that would require political office-bearers such as mayors and members of the mayoral committee to have an academic qualification. “This will regulate issues of motions of no confidence and the change of leadership in municipalities, which creates instability.” Trust deficit The Coalition of Civil Society chair, Monga Peter, said there was a trust deficit between broader society and the city, which necessitated collaboration with those who still enjoyed trust and respect in communities. Peter said, “This time around, the intervention must include those who don’t have any material interest in the city. If we are honest about collaboration and partnership, we need representation of civil society in the oversight arrangement of this support. “If I had time, I would dwell much on the noble story about the 154 teams that come all the way from [the Eastern Cape capital] Bhisho to do whatever and somewhat discount the capacity you have in the municipality. “You keep on imposing people from Bhisho as though people here are not competent. If the terms of reference of this team don’t speak to how the city can expedite the process into finally having a permanent city manager, then the support is as good as useless.” Andisa-CogtaTeam Monga Peter voices his concerns during the meeting on Friday. \(Photo: Andisa Bonani\) Coalition member Neville Goldman said previous attempts to support the metro through section 154 had preceded a major election, much like the current intervention. “It raises questions about whether political parties need money to campaign for the upcoming local government elections, or if the government is moving toward taking citizens seriously,” said Goldman. “The strange thing about this section 154 [intervention] is that it has been three times between 2011 and 2020 under different themes, including organisational restructuring and the back to basics programme, with the third intervention led by the National Council of Provinces.” No transparency Goldman said while some administrative gains were made during this period, the support was unsuccessful because of political issues. advertisement Don’t want to see this? Remove ads “Another trend is that there was no transparency in all these phases of intervention; we didn’t know who was in charge of anything or who to speak to if we experienced the difficulties of an unstable municipality. “Another issue I noticed during that period was political infighting. Unless you deal with factionalism in political parties, we are always going to have a dysfunctional metro. Leadership changes, weak oversight and the exclusion of civil society and business also played a role in its failure.”T Nelson Mandela Bay Business Chamber CEO Denise van Huyssteen outlined the economic and municipal issues that affected business operations in the city. “When it comes to issues of the economy, we’ve been very vocal about our concerns, one of the major issues being the manufacturing crisis in the city,” she said. “The reality is that if you want to keep factories operating, you need basic services to work. If you look at the latest Statistics SA report, unemployment in the Eastern Cape is the only one in the country that increased, and a lot of it was driven by manufacturing job losses in the city.” Van Huyssteen said some manufacturers had approached the chamber, stating their struggles to keep doors open and their concern that there might be more closures. Andisa-CogtaTeam Denise van Huyssteen tells of the struggles of businesses operating in the city. \(Photo: Andisa Bonani\) Mayor Babalwa Lobishe said that despite lingering challenges, progress was being made to turn things around in the metro. “It may be the fourth time of section 154, but the previous time we requested two people to assist the municipality – Lonwabo Ngoqo was brought to occupy the chief operations officer position, and Ted Pillay occupied the city manager position for a stipulated period. “Ngoqo has since been appointed permanently in that position, and if the city manager post was vacant, we would’ve advertised it as well. In all the areas of support we requested, we have ensured to fill the vacancies.” Nelson Mandela Bay acting city manager Lonwabo Ngoqo. \(Photo: Becker Semela / GroundUp\) Nelson Mandela Bay acting city manager Lonwabo Ngoqo. \(Photo: Becker Semela / GroundUp\) Stakeholder engagement Lobishe said she would call a stakeholder engagement on 30 January to brief the coalition on the progress the municipality had made. “We are turning the page. We know we have not done well in terms of stakeholder engagements as we thought the Integrated Development Plan \(IDP\) process was sufficient, but it’s clearly not.” Hlabisa said the intervention would be closely monitored. “The mayor will be working with the Cogta team on the plan of action. The programme of action will be developed with timeframes in alignment with the intervention plan. “As Cogta, we would also like to be part of the January 30 meeting if things work out as per Parliament’s schedule. “This has nothing to do with the elections, but to revive the metro to its former glory.” DM) and the acting chief operations officer, spent the weekend preparing outstanding submissions. However, at a municipal public accounts committee (MPAC) meeting on Monday, also attended by Speaker Eugene Johnson and Chief Whip Wandisile Jikeka, members refused to allow the documents to be sent directly to the council without first being considered by the committee. It was therefore resolved that the city request a deadline extension from the National Treasury and postpone the council meeting to next week, to allow MPAC to convene on Thursday to deliberate on the documents. The call followed a visit by National Treasury officials to the city on 15 April for a meeting with acting City Manager Lonwabo Ngoqo, Mayor Babalwa Lobishe, Johnson, Jikeka, the mayoral committee, the executive committee and the disciplinary board, among others. At the meeting, the National Treasury reiterated its warning that it may invoke section 216(2) of the Constitution, which empowers the Treasury to stop the transfer of funds to an organ of state that commits serious or persistent material breaches of financial management measures. ### Accountability and transparency This constitutional provision is used to enforce accountability and transparency in government finances. On Tuesday, MPAC chair Luxolo Namette said, “Treasury conceded that the problem is with management and its failure of implementing consequence management, which MPAC has been calling for. We have even written to the office of the acting city manager in some instances, but Ngoqo’s office just won’t act.” ![Andisa-MPACPressure MAIN](https://cdn.dailymaverick.co.za/i/5B-lxHA3t920U99OOjtrKEogw08=/200x100/smart/filters:strip_exif\(\)/file/attachments/orphans/LuxoloNamette_935105.jpg) *MPAC chair Luxolo Namette (Photo: Andisa Bonani)* He said the municipality was also criticised for its failure to spend grants allocated for service delivery projects, and highlighted a breakdown in communication within the metro: “The city received the letter from the Treasury in December and, as MPAC, we only got to learn about it in last week’s meeting, where the threat to withhold the funds was verbalised. “We won’t take this lightly; we will raise this issue at council so that whoever dropped the ball is held responsible.” Asked whether the council was expected to adopt the recently prepared documents required by Treasury without following due process, Namette said: “I just came out of a meeting with the speaker, chief whip and MPAC members where we decided that the meeting be postponed to allow MPAC to convene on Thursday, where the documents to Treasury will be tabled before they are taken to council for approval. The council meeting will be rescheduled for next week.” ### Persistent failure Slides from a presentation conducted by Treasury officials last week indicate that grant funding for the city will be withheld due to the persistent failure to reduce the unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) by at least 75%, The failure to implement consequence management in terms of the Municipal Finance Management Act (MFMA) and the financial misconduct regulations. The National Treasury director-general, Dr Duncan Pieterse, wrote to Ngoqo on 8 December 2025, requesting the progress reports of 10 action plans and documents to be submitted by the end of March and the end of October. ![Treasury Director-General Duncan Pieterse. (Photo: Phando Jikelo / Parliament of SA)](https://cdn.dailymaverick.co.za/i/kM2k7UUc-BifHtZ6b-2FeJ4VxN8=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2025/11/Damien-Pieterse_4202.jpg) *Treasury Director-General Duncan Pieterse. (Photo: Phando Jikelo / Parliament of SA)* Despite these clear directives, the city defaulted on its submissions and failed to provide any explanation to the National Treasury. The metro’s grant funding was initially at risk of being withheld when Pieterse warned Ngoqo that the Treasury intended to stop transferring funds to municipalities that commit serious or persistent material breaches of the measures established in terms of section 216(1) of the Constitution. “This step is necessitated by the municipality’s persistent failure to address UIFWE as required in terms of section 32 of the MFMA. Additionally, the municipality has failed to implement consequence management as required under Chapter 15 of the MFMA, read with the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.” Duncan referred to a letter sent to the city on 11 November 2025, alerting the city of the intention to stop the funds. [Read more Treasury threat to withhold NMB funding puts salaries and services on the line November 18, 2025 ![Image](https://cdn.dailymaverick.co.za/i/2hIqVsqY_Jrfccy5pQQdX_xDTAU=/450x0/smart/file/dailymaverick/wp-content/uploads/2025/10/Oped-Bank-ECnamesTW-main.jpg)](https://www.dailymaverick.co.za/article/2025-11-18-treasury-threat-to-withhold-nmb-funding-puts-salaries-and-services-on-the-line/) The Treasury’s deputy director-general for intergovernmental relations, Ogalaletseng Gaarekwe, notified Ngoqo about the move to withhold the equitable share due to the failure to address the UIFWE. In its submission, the municipality noted that MPAC had made recommendations to write off R1.5-billion in UIFWE. Despite the initial threat to freeze the money, the Treasury eventually transferred the December equitable share tranche — amounting to R546-million — to the metro on 9 December 2025. Duncan indicated that while reference has been made to forensic investigations, the city failed to address matters relating to investigations by the Disciplinary Board as required in terms of Chapter 15 of the MFMA, read with the financial misconduct regulations. “There is still persistent non-compliance with section 32 and Chapter 15 of the MFMA, read together with the Financial Misconduct Regulations. Therefore, the National Treasury hereby notifies you of its intention to stop the transfer of funds in line with section 216 (2) of the Constitution, read with section 38 of the MFMA, until the requirements outlined are met,” he told Ngoqo. Section 38 (2) (a) of the MFMA allows a municipality to submit written representations within seven days to the National Treasury regarding the proposed halting of funds. The progress reports required by the Treasury, none of which has been submitted, include: - An updated council-approved UIFWE prevention and reduction strategy; - An updated and council-approved UIFWE policy; - An action plan with monthly activities to process historical UIFWE; - A copy of the reviewed MPAC terms of reference; - A copy of the policy for UIFWE documentation; - An amendment of the terms of reference for the Disciplinary Board; - An action plan to address the backlog in the financial misconduct investigation; - A reviewed and adopted consequence management policy; - A copy of the reviewed UIFWE preventative controls; and - A copy of the internal audit action plan. In December 2024, the Treasury requested municipalities across South Africa to develop an action plan, setting out a procedure to process the UIFWE balance up to 30 June 2024 by the end of August 2025. ### Postponement of council meeting Johnson confirmed the postponement of the council meeting, stating the council would ensure that it did not miss the 30 April deadline. “We postponed because MPAC members wanted to scrutinise some of the documents, especially the ones that have to do with policy and the UIFWE. So we decided to allow for this process to take place, then bring the documents to council next week.” ACDP councillor Lance Grootboom said, “We strongly condemn the last-minute attempt to force critical UIFWE-related documents through council after months of delay, despite clear directives and deadlines from National Treasury. "Treasury’s letter dated 8 December 2025 made it clear that the municipality was already facing serious compliance concerns. Treasury required specific governance and compliance documents, several of which clearly required council approval or formal resolution.” ![Andisa-Pylons](https://cdn.dailymaverick.co.za/i/3TXdsTQUzNejUn8qQTEcX8-fVw8=/200x100/smart/filters:strip_exif\(\)/file/attachments/orphans/LanceGrootboom_133737.jpg) *ACDP councillor Lance Grootboom raised concerns about the non-disclosure of the Treasury letter. (Photo: Deon Ferreira)* Grootboom said addressing the Treasury’s concerns at the last minute raised serious concerns about neglect of duty, governance failure and possible misconduct. “The facts before us are that these matters were not tabled properly and timeously before MPAC and council. Instead, after missed deadlines and after National Treasury engagement, the documents were only emailed through to MPAC and councillors on 21 April at 08.56, with a council meeting then called for 22 April 2026,” he stated. “This is unacceptable. The ACDP wishes to state clearly that proper council process was not followed. Committees that should have played a central role in shaping and interrogating these amendments, including budget and treasury and MPAC, were not given a proper opportunity to make input.” Grootboom said if Ngoqo, Lobishe, Chief Financial Officer Jackson Ngcelwane and other officials were aware of the Treasury correspondence, they must be held accountable.**DM**