The National Treasury has warned the Nelson Mandela Bay Municipality that it may withhold its December equitable share payment due to R22-billion in unauthorised, irregular, fruitless and wasteful expenditure, the highest in South Africa. This threat came during a meeting on Monday, following the reclamation of R142-million in unspent grants. The move could severely impact service delivery in the deficit-plagued metro.
In a tense meeting on Monday, November 3, 2025, the National Treasury issued a stark warning to the Nelson Mandela Bay Municipality, threatening to withhold its December equitable share—a crucial unconditional funding stream—over the metro's failure to address R22-billion in unauthorised, irregular, fruitless and wasteful expenditure. This figure represents the highest such amount in the country, as confirmed by multiple officials during the session.
The Treasury's concerns were compounded by an earlier decision to reclaim R142-million in unspent conditional grants, prompted by the metro's prolonged use of an acting city manager exceeding six months. Withholding the equitable share, which funds basic services, support for poor households and municipal administration, could exacerbate the metro's financial woes. It is currently operating at a R1.58-billion deficit, dipping into reserves that have already been reduced by R500-million in trade losses.
Khanya Ngqisha, EFF member of the mayoral committee for treasury, described the meeting as a 'horror' and a 'wake-up call' in a video statement. 'Of course, the issue of unauthorised, irregular, fruitless and wasteful expenditure and “us being the highest in the country” that sits in our books was a major issue once again... We have been warned by the National Treasury seriously; otherwise, we might not receive any grants, and this will affect service delivery,' he said.
DA councillor Brendon Pegram echoed the gravity, noting, 'We currently have more than R22-billion on our annual financial statements, and this is the highest in the country. The Treasury actually confirmed it yesterday in that dreadful meeting.' He highlighted supply chain circumventions as a key issue, warning of potential cash flow problems, including difficulties paying for bulk electricity, if funding is withheld. 'No progress has been made in [sorting out] unauthorised, irregular, fruitless and wasteful expenditure in the last two years. It is a total mess. This municipality needs to get their act together,' Pegram added.
Background efforts to mitigate the issue have faltered. In March 2025, Executive Mayor Babalwa Lobishe sought to write off R3.2-billion in irregular expenditure citing a 'limitation of scope,' claiming documents for R2.6-billion were missing. However, ACDP councillor Lance Grootboom accused her of misinterpreting a Treasury letter, which required an investigation by the municipal public accounts committee (MPAC) before any write-off. A prior attempt to write off R7-billion without such scrutiny was reversed by the Treasury.
In August 2025, MPAC chairperson UDM councillor Luxolo Namette led a delegation to the DA-controlled City of Cape Town to study oversight strategies on curbing wasteful spending and enhancing accountability. 'We must admit that the CCT is one of the leading municipalities in implementing oversight on spending... For us to improve, we need to learn from our counterparts for the benefit of our people,' Namette stated at the time.
The ongoing saga underscores deep governance challenges in Nelson Mandela Bay, potentially jeopardizing essential services for residents.