Kumaran Nair writes:

The outcomes from the comprehensive analytical study of the 2025/26 Municipal Budget, the 2025/26 Municipal Adjustments Budget and the 2025/26 Mid Year Performance Review of the JB Marks Local Municipality reveal a number of worrisome factors related to Section 18 of the MFMA:

The implementation and management of Section 18 of the MFMA is prescribed as non-negotiable, but it is encountered by the following carrying debt, namely

1. The 2024/25 Arrear Municipal Services Debt (AMSD) = R 1, 544, 872 billion
2. The 3^rd Quarter 2025/26 AMSD: R 1, 674, 674 billion
3. The Projected 2025/26 AMSD – 30^th June 2026: R 1, 813, 951 billion
4. The Arrear and Current Account Debt to Eskom: R 711, 841 million  
5. The Arrear and Current Account Debt to Water: R 58, 814 million

In addition to the aforementioned, it is the year-to-year financial deficits in the range R 1, 272, 350 billion to R 1, 365, 712 billion.       

Sources of Information – The 2024/25 and 2025/26 In-Year Monitoring and the Municipal Budget Publications of the National Treasury

Outcomes must be reached according to the MFMA

The Executive Mayor, in terms of Section 52 and Section 53 of the MFMA, must lead and direct the Municipal Budget process with the Members of the J B Marks Municipal Council, the Municipal Manager, and Senior Management. The Residents of Potchefstroom, Ikageng, Mohadin, and Promosa must be the definitive beneficiaries with the undisturbed and uninterrupted provision of institutional and infrastructure service delivery.   

Other outcomes related to Section 18 of the MFMA in respect to the 2026/27 proposed draft budget include:

1. A respective failure to achieve absolute compliance with the legal requirements of Section 18 of the MFMA. In essence, the Executive Mayor, the Municipal Manager, and the Chief Financial Officer remain unable and will find it impossible to state the true and real rand value of the aggregate Municipal Own Revenue Fiscal Framework and whether the 2026/27 Draft Municipal Budget is of good economic standing.
2. The Executive Mayor, the Municipal Manager, the Chief Financial Officer, and Senior Management implemented and managed an expenditure-driven decision-making approach and mindset to the compilation of the municipal budget. In their collaborative action, they first determined the recurrent expenditure, then fixed the Municipal Own Revenue Fiscal Framework to balance and indicate that the 2026/27 Municipal Budget is funded and sustainable.
3. It is imperative to acknowledge that the average municipal own revenue collection range of 69,1% to 73,5% from the Potchefstroom Individual Tax Base and the Conditional and Unconditional (Equitable Share R 462, 582 million and approximately R 175, 6 million Conditional) Grants are the only secured internal primary sources of municipal own revenue for the 2026/27 municipal financial year.  The average range for the municipal own revenue collection rate and standard for Ikageng, Promosa, and Mohadin is currently at 11, 1% to 15,3% whilst the demand for the provision of water and electricity in the aforementioned areas must be at 100% in supply.

• It is imperative to also record that the 2026/27 Draft Municipal Budget does not account for the theft of water and electricity consumption from the unlawful and illegal connections within the unauthorized informal settlements around Ikageng, Promosa, and Mohadin.    
• The One Singular question: Is the 2026/27 Draft Municipal Budget funded and sustainable “Just on Paper” and is a “Paper Tiger” without the economics and compliance to the legal requirements of Section 18 of the MFMA, or is the 2026/27 Municipal Budget funded and sustainable by competence, diligence, and leadership capability in municipal own revenue collection during the 2026/27 municipal financial year?
• In the current frightening decline in economic conditions and the shrinking disposable household income, what would be the root causes for the expansion of the parameters in the Municipal Own Revenue Fiscal Framework and the Expenditure parameters within the 2026/27 Municipal Budget?

National Treasury paints a picture of distress

The Executive Mayor, the Municipal Manager, the Chief Financial Officer, and the majority coalition of the ANC in the JB Marks Municipal Council must provide the residents with the root causes as to why the National Treasury has declared and continues to publish the JB Marks Local Municipality for the last 7 years as a Financially Distressed Municipality with a precarious and perilous current, medium, and long term financial health and sustainability.

The JB Marks LM is on a level 4 (highest) warning alert signal due to the state of financial health and sustainability.

The Executive Mayor, the Municipal Manager, the Chief Financial Officer, and the majority coalition of the ANC in the JB Marks Municipal Council will convince the residents of Potchefstroom, Ikageng, Promosa, and Mohadin that the 2026/27 Municipal Budget is funded and sustainable, and that institutional and infrastructure service delivery will be compromised and denied to the People when the J B Marks Municipal Council does Not adopt the Municipal Budget.

In addition, the Executive Mayor, Municipal Manager, Chief Financial Officer, and the majority coalition ANC must be requested to provide the following, namely 

1. The overall institutional strategy as to the why, what, and how the economic, financial, and management risks and threats will be identified, isolated, and eliminated during the 2026/27 municipal financial year.

• The institutional strategic sequential alignment between institutional and infrastructure service delivery and financial management of the 2026/27 Municipal Budget. 

The key to effective Municipal Revenue Management is that the results and performance must be measured on the Actual Rand Value in municipal own revenue collection. The Billing/Levying on consumption of municipal services is not the measurement of results and performance.  

Extra background:

On Friday, August 31, 2001, when former Minister of Finance, Trevor Manuel, and the National Treasury introduced the Municipal Finance Management Bill and Reforms, he stated that the strategic and transformational intent is for the political sphere under the supervision of the Executive Mayor / Mayor, with the Members of the Municipal Council, will determine and adopt policy and strategic priorities for institutional and infrastructure service delivery

The National Treasury will be transferring the Conditional and Unconditional Grants for the 2026/27 Municipal Financial Year to the JB Marks Local Municipality, namely

1. The Equitable Share: R 462, 582 million
2. The Conditional Grants: R 175, 631 million

The Division of Revenue Act grants allocations that are referred to as “Grants In – Kind” is not transferred directly to the JB Marks Local Municipality but to the relevant National Departments to implement infrastructure projects within the municipal boundary of the J B Marks Local Municipality.      

Finally, whilst the Gospel of MFMA places a premium on judicious economic and financial decision-making for the Municipal Budget, the National Treasury, the North West Provincial Treasury, the NW CoGTA, and the NW Provincial Legislature are creating an enabling capability for unethical, corrupt, significantly high-risk, negligent, and incompetent decision-making in the compilation of the 2026/27 Draft Municipal Budget.

The residents of Potchefstroom, Ikageng, Promosa, and Mohadin will be denied again.