Western Cape Government approves Theewaterskloof Financial Recovery Plan

The Western Cape Government has approved the Financial Recovery Plan (FRP) for Theewaterskloof Municipality to address its financial and service delivery challenges.

The municipality’s financial position has declined sharply since early 2023. In the 2022/23 financial year, Theewaterskloof collected over 95% of planned revenue and ended the year with a surplus. But by March 2023, governance instability and obligations exceeding available cash began to expose deep weaknesses. By August 2024, the collection rate had fallen to 64%, well below the National Treasury norm. This, as cash and cash equivalents dropped from R70.96 million in August 2023 to R43.28 million a year later. Over the same period, commitments rose to R43.73 million.

Other pressing challenges include growing debt to creditors such as Eskom, infrastructure backlogs, weak financial controls, and staffing shortages, all of which have strained the municipality’s ability to serve its residents.

The FRP sets out a phased approach to recovery:

• The rescue phase will focus on restoring cash flow, enforcing cost containment, improving revenue collection, and negotiating debt repayments.
• The stabilisation phase will address governance and institutional weaknesses, strengthen financial systems, and prioritise infrastructure renewal.
• The sustainability phase will entrench sound financial management practices, ensure cost-reflective tariffs, and build long-term resilience in service delivery.

Western Cape Minister of Finance, Deidré Baartman, said, “Theewaterskloof Municipality went from financial surplus to financial crisis in just two years. The Financial Recovery Plan is a tough but necessary intervention to restore fiscal discipline, credibility, and stability. With strong oversight and the commitment of all stakeholders, Theewaterskloof can be put back on a path that delivers reliable services and restores confidence for its residents.”

Minister Baartman extended her gratitude to the teams from the municipality, Provincial Treasury and National Treasury for working together to develop this draft plan, as well as to residents who made inputs on the initial draft FRP. 

The success of the plan will depend on the full implementation of the plan by the municipality, active monitoring by Provincial Treasury, and ongoing cooperation with National Treasury and the Western Cape Department of Local Government.

The FRP can be accessed here: https://www.westerncape.gov.za/treasury/article/theewaterskloof-frp