For nearly a decade, Makhanda has lived through a peculiar kind of collapse. Taps run dry for days at a time. Roads crumble faster than they can be patched. Raw sewage spills into residential streets. And behind the scenes, in council chambers and finance offices, the municipality has been bleeding public money through procurement failures and financial controls so broken that auditors cannot say with confidence where much of it went.
Official records reviewed by The Baseline show Makana Local Municipality has accumulated almost R939 million in unauthorised, irregular and fruitless and wasteful expenditure, while receiving seven consecutive disclaimer audit opinions from the Auditor-General of South Africa, the most severe outcome a public institution can receive.
This week, the Special Investigating Unit (SIU) confirmed to The Baseline that it has concluded its probe into the municipality under Presidential Proclamation 207 of 2024. Two matters have been referred to the National Prosecuting Authority. A third has gone for further criminal investigation. Civil litigation is being considered.
According to the SIU’s official response to The Baseline:
Get South African news as it happens
Follow The Baseline on WhatsApp, sent straight to your phone.
Join our WhatsApp channel“The SIU has concluded its investigation into the matters identified in Proclamation 207 of 2024 and has drafted a Final Presidential Report. The SIU has made two referrals to the National Prosecuting Authority (NPA) and an administrative recommendation to the municipality and the National Treasury. Yes, a matter was referred to further criminal investigation, and the SIU is considering civil litigation.”
Selby Makgotho, Spokesperson, Special Investigating Unit, 17 July 2026
A municipal finance system this compromised does not happen by accident. It happens when nobody with the power to stop it has any reason to.
Following the money
The categories matter. Under the Municipal Finance Management Act, unauthorised expenditure means spending outside an approved budget. Irregular expenditure means procurement or legislative requirements were broken, whether or not value was ultimately delivered. Fruitless and wasteful expenditure means money spent that could reasonably have been avoided altogether.
According to the Auditor-General’s findings, Makana’s accumulated figure breaks down as follows.
Not all of it is money that vanished. Some is a budget line crossed, a form filed late, a quotation skipped. But seven straight years of disclaimers is not a story about paperwork. It is a story about a system nobody has bothered to fix.
Seven years, one verdict
A disclaimer is not the same as a qualified audit that flags specific errors. It is what happens when the Auditor-General cannot get enough evidence to form any opinion at all. Jay Kruuse, Director of the Public Service Accountability Monitor (PSAM) at Rhodes University, put it plainly in written comments to The Baseline.
“A disclaimer is the worst outcome the Auditor-General can issue. It doesn’t always mean the municipality’s finances are ‘bad’ in a graded sense, it means the AG could not obtain sufficient, appropriate evidence to form an audit opinion at all on whether the financial statements are reliable. In other words, the numbers presented may or may not fairly reflect reality; the auditors simply have no basis to say either way, because the underlying records, documentation, or systems weren’t there to check.”
Jay Kruuse, Director, Public Service Accountability Monitor
According to Kruuse, the pattern is structural, not incidental. The municipality’s control environment has effectively collapsed: record-keeping, asset registers and internal controls have failed year after year, not as isolated mistakes but as a system with no working checks left. Consequence management has failed alongside it. The law requires the Accounting Officer to discipline staff who breach financial controls. “However,” Kruuse wrote, “this rarely occurs in Makana.”
Oversight has deteriorated too. Council committees that should be forcing administration to fix these problems have, in Kruuse’s words, been “stifled by political office-bearers,” meaning the layer of government meant to hold officials accountable has itself become part of the problem. The result is a cycle that renews itself: each year’s disclaimer repeats the last, because the recommendations from the previous audit were never properly implemented.
“The Council has not taken adequate steps to tackle the abuse and repeated violations of laws, as a result many communities have lost faith in the Council. No wonder then that Courts and the Human Rights Commission have reached conclusions that the Council itself should be dissolved.”
Jay Kruuse, PSAM
Makana is not alone in this, which is arguably worse. “Makana has now received a disclaimer opinion for seven consecutive years (2018/19 through at least 2023/24),” Kruuse wrote, “placing it among a small group of repeat-disclaimer municipalities nationally alongside Sundays River Valley, Ditsobotla, and Kannaland.” Ditsobotla, in the North West, has managed nine straight years. It is not a coincidence. It is a pattern in how South African local government fails, repeated in town after town with nobody stopping it.
What the SIU found
The SIU’s investigation ran into the same wall the Auditor-General keeps hitting: there is often nothing left to check. Asked directly about the challenges it faced, the unit’s response was almost weary.
“In general, and as per the norm with most government institutions, the lack of documentation remains a stumbling block.”
SIU official response to The Baseline
The unit confirmed that the matters set out in the presidential proclamation were addressed “based on the limited documentation available.” A Final Presidential Report has been drafted and submitted, but whether the public ever sees it is not up to the SIU. “It is the President’s prerogative to decide on its public release,” the unit said.
The pump that cost R4.6 million
The figures above are abstractions until you follow one procurement all the way through. This one took four years, involved at least three separate legal proceedings, and ended up costing nearly double its original contract value, all while the city it was meant to serve went without adequate water.
Makhanda’s water supply depends on the Howieson’s Poort and Settlers dams, which pump raw water to the Waainek treatment works. The Howieson’s Poort pump station needs three specialised pumps running to keep up. By mid-2022, only one or two were working, straining the entire system and feeding directly into the outages residents were already living through.
In June 2022, Makana awarded a tender for a replacement pump to Manco Business Enterprise, an East London-based intermediary, for R2.3 million. Manco had no manufacturing capacity of its own and subcontracted the actual build to Donnlee Pump Tech, a specialist firm in Benoni, on 14 July 2022.
What happened next was a straightforward breach of municipal finance law. According to affidavits filed in criminal proceedings, Asanda Gidana, then the municipality’s Director of Engineering and Infrastructural Services, authorised an advance prepayment of the full R2.3 million to Manco, before any Service Level Agreement was finalised and without the due diligence the law requires. Municipal Manager Pumelelo Kate and Chief Financial Officer Nomfundo Ntsangani signed off on it. The MFMA is explicit that government does not pay for goods before they are delivered. Makana did anyway.
Manco took the R2.3 million and passed on only R1.735 million to Donnlee, the company actually building the pump, keeping the rest. Donnlee finished manufacturing on 24 February 2023, then refused to release the pump because Manco still owed it money.
When the pump was finally installed, according to municipal spokesperson Anele Mjekula, its total cost, tender value plus the cession settlement, had reached approximately R4.6 million. Add the R635,000 paid to Gidana for an unfair dismissal that should never have happened, and the true price of a single pump climbs past R5.2 million.
Councillor Lungile Mxube of the Makana Citizens Front laid criminal charges of fraud and corruption against Kate and Vara in August 2025, alleging the pair had facilitated an unlawful payment and then failed to pursue Manco for the money it withheld.
A crisis the Commission calls man-made
On 10 June 2026, the South African Human Rights Commission released its findings on Makana’s water and sanitation crisis, following more than three years of complaints, monitoring and two subpoena hearings. The Commission had received over 30 formal complaints since 2023 about outages, sewage spills and collapsing infrastructure.
Its conclusion cut through the municipality’s usual defence. This is not drought. It is not a lack of bulk water. According to the SAHRC, the crisis is the direct result of governance failure and financial mismanagement, full stop. Communities including N Street, Upper Nandi, Sun City and Rona Kal are still relying on the bucket system, more than two decades after the country was supposed to have eradicated it.
Having watched years of provincial and national interventions fail to change anything, the Commission took the unusual step of formally urging the Eastern Cape Provincial Executive to assess grounds for invoking Section 139(1)(c) of the Constitution, the clause that allows a province to dissolve a municipal council entirely and take over administration directly.
Treasury pulls the plug
In early July 2026, National Treasury announced it was temporarily withholding equitable share payments to 69 municipalities nationwide. Makana was on the list, alongside five other Eastern Cape municipalities.
The equitable share is the unconditional grant municipalities rely on to fund basic services for poor households. For a municipality as financially dependent as Makana, losing it means immediate cash flow trouble on top of everything else.
Treasury framed the move as corrective rather than punitive. The numbers behind that decision are national in scale: R145.21 billion in irregular expenditure across municipalities since 2021/22, R40.14 billion of that in 2024/25 alone, and R118.13 billion in unauthorised expenditure over the same period. Makana is not an outlier. It is a symptom.
Who answers for this
Seven years of disclaimed audits, close to a billion rand in unauthorised and irregular spending, and a single water pump that cost taxpayers R5.2 million: none of this happened quietly, and none of it happened without someone signing off on it.
The SIU’s referrals to the NPA matter only if they lead to prosecutions. The SAHRC’s call to dissolve the council matters only if the province acts on it. Treasury’s decision to cut off funding matters only if it is paired with someone actually fixing what is broken, because a municipality with no money and no functioning controls does not automatically become a municipality with working taps.
The Eastern Cape Provincial Executive now has a formal basis to invoke Section 139(1)(c). The NPA has two referrals sitting on its desk, plus the criminal charges laid by Mxube against Kate and Vara. What happens next will say more about accountability in South African local government than any audit report ever could.
No response from Makana Local Municipality
Throughout this investigation, The Baseline sought to give Makana Local Municipality an opportunity to explain its position. Detailed questions were sent to Makana regarding the accumulated irregular expenditure, the seven consecutive audit disclaimers, consequence management for officials, the R209 million in employee costs, consultant spending, and the withholding of the equitable share. No response was received before publication.
