South African court orders national government to intervene in municipal financial crisis

Failed service delivery at municipal level is not a new phenomenon, even in countries–such as South Africa–that have a relatively well-functioning local governance system.

Local elections are an important–but often imperfect mechanism for ensuring effective and accountable local service delivery. When elections fail to provide minimally responsive, effective and accountable municipal services, communities, non-governmental organizations and private companies can resort to court action to “straighten” failing municipalities. This practice is increasingly common in South Africa. Such is the case of Astral Operations Limited, the largest business and employer in Lekwa Local Municipality in Mpumalanga Province.

After continued service delivery failures by Lekwa, Astral approached the North Gauteng High Court in Pretoria to prod the national executive to intervene in the imploding municipality. The company ultimately called on the court to order a national intervention under section 139(7) of the Constitution, and section 150 of the Municipal Finance Management Act (MFMA), as a measure of last resort. Astral argued that the jurisdictional requirements for a national intervention had long been triggered, making the intervention a necessity.

Section 139(5) of the Constitution provides for mandatory provincial intervention prompted by a financial crisis in a municipality. The section provides for three possible provincial interventions when a municipality continuously breaches its obligations to provide basic services or to fulfil its financial commitments materially, due to a financial crisis:

  • intervene and impose a financial recovery plan that binds the municipality in the exercise of its legislative and executive authority (limited, however, to solving the crisis of a municipality’s financial affairs);
  • where the municipality cannot or does not approve a budget or any revenue-raising measure to give effect to the recovery plan, dissolve the municipal council and appoint an administrator who must approve a temporary budget or revenue-raising measures to give effect to the recovery plan; or
  • implement the recovery plan, should it choose not to dissolve the municipal council.

On 12 April 2021, the Court ordered the national government to intervene in Lekwa and for National Treasury to prepare a financial recovery plan to be approved within six months of the court order. In response, the national executive resolved to dissolve the municipal council of Lekwa, which was agreed upon on 12 May 2021. This resolution was followed by a notice of the said dissolution and the appointment of Mr Johann Mettler as the administrator on 28 May 2021.Regarding the preparation of the recovery plan, the Minister of Finance has insisted on preparing the recovery plan within a period not exceeding 90 days determined by the Minister.

The outcome of Astral’s litigation should propel municipalities to start asking their provincial governments for help, in the spirit of intergovernmental relations, before citizens approach the courts.

Read the full, original post in the Local Government Bulletin (South Africa), published by the Dullah Omar Institute at the University of the Western Cape: Thabile Chonco. Court orders national government to leapfrog into Lekwa Local Municipality. September 14, 2021

Photo credit: José Carlos Babo – Sleeping on the Job: Typical side road arts & Crafts in Mpumalanga Province, South Africa (under Creative Commons license).