The state of Military Road in Nelson Mandela Bay — a stone’s throw away from the seat of the local government — is a reflection of municipal dysfunction in the metro. (Photo: Deon Ferreira) At the end of June, a week before National Treasury announced it would withhold Nelson Mandela Bay’s July equitable share payment, the metro had just 49 days of cash left to cover its costs.
Treasury officials said the decision followed years of frustration over the metro’s failure to address mounting Unauthorised, Irregular, Fruitless, and Wasteful expenditure (UIFWE). At around R28-billion, Nelson Mandela Bay has the highest UIFWE figure of any municipality in the country.
The decision to withhold the equitable share from the metro comes as the municipality is already dealing with serious financial issues.
It is collecting only about 70% of its rates, and operational issues in the electricity and water departments have caused both these trading services to run at a deficit. The electricity department’s deficit, over R1-billion, means that the funds to buy bulk electricity from Eskom must now be subsidised by rates.
No end in sight
Sixteen days later, there is no end in sight to the standoff over the equitable share. As the city awaits feedback from the National Treasury, it is facing tight fiscal constraints.
As of the end of June, the municipality had 49.83 days (1.66 months) of funds left to cover its costs, while cash reserves were at R2.8-billion. These figures are from a report tabled at the Budget and Treasury Committee meeting on Thursday.
The report states that the metro’s investment portfolio has decreased by R909-million (24%) since June 2025, from R3.7-billion to R2.8-billion.
“This could have been because of the number of payments that are processed during the period July 2025 to June 2026, as leading up to the conclusion of the prior year annual financial statements (2024/25), poor debtors’ collection rate which also had a material impact on the cashflow position, delayed transfer of conditional grants and a sign that the municipality may be utilising the limited reserves to service certain operations, which is not financially sustainable,” the report continues.
The EFF’s Khanya Ngqisha, the mayoral committee member responsible for Treasury, previously said the equitable share payment was earmarked to fund free basic services provided through the metro’s assistance-to-the-poor programme.
DA councillor Brendon Pegram said the 49 days of cash the city had at the end of June was the lowest cost coverage the city has ever experienced in recent years.
City situation ‘heartbreaking’
“It’s heartbreaking that the city can hardly uphold itself. My concern is the low cost coverage; the city would only be able to sustain itself for about 50 days if ratepayers stopped paying or if the city stopped receiving any sort of income.
“The major concern is that the metro’s cost coverage ratio has gone down from five to 1.66 months, which is absolutely terrible, and it needs to be taken very seriously. All the payments in the municipality must be enough for salaries and bulk purchases for the delivery of services,” Pegram added.
/file/attachments/orphans/WhatsAppImage2026-03-05at140956_394505_945876.jpeg "NMB DA councillor Brendon Pegram.
<br>(Photo: Andisa Bonani)")
(Photo: Andisa Bonani)
In a terse answer to questions about the prospects of National Treasury releasing the equitable share payment anytime soon, they responded as follows: “National Treasury is still processing all the submissions from municipalities, including the one from Nelson Mandela Bay Metro. This is an ongoing process that should be allowed to reach its finality. It should be noted that the National Treasury will not provide real-time commentary while the process is ongoing.”
‘Stringent’ cost-cutting
The metro announced “stringent” cost containment measures on Thursday. This included the reduction of non-essential domestic and international travel and hospitality expenditure, and the fast-tracking of the metro’s review of its overtime policy.
“The Municipality has also resolved to intensify revenue collection through accelerated debt recovery from all spheres of government, including government departments and public entities. The same approach will apply to outstanding municipal debt owed by municipal officials, councillors and ward committee members, in line with the principle that every customer must meet their financial obligations,” the statement continued.
According to the statement, the municipality will also increase its operations to cut illegal electricity and water connections, including prepaid meters that have likely been tampered with, and efforts to collect outstanding municipal debt.
“We call on councillors, municipal officials, businesses and residents to work with us in securing the long-term future of Nelson Mandela Bay,” Executive Mayor Babalwa Lobishe said. She added that the municipality will “further accelerate” the installation of electricity and water smart meters while implementing measures to improve the accuracy and integrity of its billing database.
At the city council meeting earlier this week, ACDP councillor Lance Grootboom pushed for the acting city manager, Advocate Lonwabo Ngqogo, to give a presentation on the reasons for the withholding of the metro’s equitable share and the plan to fix it.
He said he sits on the Municipal Public Accounts Committee and said he doesn’t even know why the equitable share was withheld.
/file/attachments/orphans/LanceGrootboom_133737_382791.jpg "ACDP councillor Lance Grootboom (Photo: Deon Ferreira)")
“If the equitable share is not important to you guys,” Grootboom continued, “tell the poorer communities: ‘we don’t care about service delivery’.”
He said while the councillors were taking a break earlier in the meeting, the presentation on the equitable share was shown on a screen at the venue. “It was on this screen,” Grootboom said.
DA Councillor Gert Engelbrecht said there are two MPAC meetings scheduled for next week, and he too would like to know what is going on. DM