- South Africa’s National Treasury has temporarily withheld July 2026 equitable share transfers to 69 municipalities after repeated failures to comply with the Municipal Finance Management Act.
- Major metros including Johannesburg, Nelson Mandela Bay, Mangaung and Buffalo City are among the affected municipalities, while some councils have already met the required conditions for partial release of funds.
- Finance Minister Enoch Godongwana says the move is meant to restore fiscal discipline, strengthen accountability and protect service delivery, not to punish municipalities permanently.
South Africa’s National Treasury has temporarily withheld July 2026 equitable share transfers to 69 municipalities as it steps up pressure on councils that have failed to clean up persistent financial mismanagement and non compliance with budget and spending rules.
The affected municipalities span all nine provinces and include major metros such as the City of Johannesburg, Nelson Mandela Bay, Mangaung and Buffalo City. Treasury said the decision follows repeated efforts to support councils through guidance, training and direct engagement, but compliance has remained weak.
The department said the action was taken under section 216(2) of the Constitution together with the Municipal Finance Management Act. It said the withholding is temporary and corrective, with no immediate impact on service delivery expected, and will be lifted once municipalities provide proof that corrective steps have been implemented.
Treasury said the main failures include adopting unfunded budgets, failing to deal with unauthorised, irregular, fruitless and wasteful expenditure, and not meeting statutory obligations to Eskom, water boards, SARS, the Auditor General and pension funds. It also raised concern that many municipalities have failed to process irregular expenditure through Municipal Public Accounts Committees and have not carried out proper disciplinary or recovery actions.
The scale of the problem remains severe. Since the 2021 to 2022 financial year, municipalities have recorded R24.12 billion in fruitless and wasteful expenditure, R145.21 billion in irregular expenditure and R118.13 billion in unauthorised expenditure. Treasury also said 45% of municipalities adopted unfunded budgets in 2024 to 2025, while municipal debt to Eskom and water boards continues to weigh heavily on bulk service providers.
The Minister emphasised that for government reforms to truly take root, all state institutions must fully participate.
“Reforms must be accompanied by making sure that people are performing. If you have reforms and you don’t have willing partners to participate, the reforms are not going to effective,” Godongwana said.
“South Africans deserve municipalities that are financially sound, accountable, and capable of delivering services. By invoking the Constitution, we are signalling seriousness about governance, fiscal responsibility, and the rule of law,” Godongwana said.
Author: Bryan Groenendaal
