The National Treasury says it is in the process of temporarily withholding the July 2026 equitable share transfers to selected municipalities that have persistently failed to adhere to the Municipal Finance Management Act, with billions of rand going to waste.

Treasury says this is aimed at instilling fiscal discipline and ensuring that public money is properly managed; addressing Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE); and holding municipal officials and office-bearers accountable where required by law.

Equitable share transfers are essentially government grants, but unlike conditional grants, they are unconditional. The South African Constitution mandates these transfers to ensure provincial and local governments receive a fair portion of nationally raised revenue to provide basic services and perform their duties.

Treasury says the municipalities, which include three Metros: City of Johannesburg, Mangaung, Nelson Mandela Bay and three Western Cape municipalities – Theewaterskloof, Laingsburg and Beaufort West, have been given sufficient notice in writing and urged to take measures to change their financial management positions ahead of the withholding of funds.

They were also given a platform to send, in writing, reasons why their funds should not be withheld.

Treasury says it does not foresee any impact on service delivery, as the withholding of funds is temporary.

“Non-compliance with the legislation is not only a dereliction of fiduciary duties by the political and administrative leadership of municipalities, but it is also threatening the financial sustainability of bulk suppliers (water boards and Eskom). In addition, failure to pay third parties negatively impacts the ability of statutory bodies to continue operating optimally.”

Treasury goes further to say that in many cases, some of these errant municipalities have failed to show that they are trying to recover mismanaged public money, and there is also little consequence management being implemented.

The figures are staggering:

• Since 2021-22, municipalities have incurred a total of R24.12 billion in fruitless and wasteful expenditure;
• Since 2021-22, municipalities and their municipal entities have incurred irregular expenditure of R145.21 billion; R40.14 billion was incurred in 2024-25 alone;
• Since 2021-22, municipalities have disclosed a total of R118.13 billion in unauthorised expenditure, R63.43 billion (54 per cent) of which was on non-cash budget items;
• Budget credibility continued to deteriorate. In 2024-25, 116 municipalities (45 per cent) adopted unfunded budgets – up from 113 (44 per cent) in the previous year’s adjusted budget;
• By the 2024-25 year-end, municipalities owed interest of R3.40 billion to Eskom and R1.21 billion to water boards, and
• Late payments also extended to payments of contributions and third-party deductions. A total of 48 municipalities (20 per cent) had third-party deductions that were overdue for more than one month.

The full list of selected municipalities whose equitable share transfers will be withheld:

Eastern Cape – Buffalo City, Nelson Mandela Bay, Makana, Sundays River Valley, Inxuba Yethemba, Port St Johns;

Free State – Mangaung, Letsemeng, Kopanong, Mohokare, Xhariep District Municipality, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe, Mafube;

Gauteng – City of Johannesburg, Emfuleni, Lesedi, Sedibeng District Municipality, Merafong City, Rand West City;

KwaZulu-Natal – iMpendle, uMzinyathi District Municipality, Newcastle, eMadlangeni, Amajuba District Municipality, AbaQulusi, uMkhanyakude District Municipality;

Limpopo – Mopani District Municipality, Musina, Thabazimbi, Modimolle-Mookgopong, Fetakgomo Tubatse;

Mpumalanga – Victor Khanye, Emakhazeni, Nkomazi;

Northern Cape – Kamiesberg, Khâi-Ma, Ubuntu, Umsobomvu, Emthanjeni, Renosterberg, Thembelihle, Siyathemba, !Kai !Garib, Magareng, Phokwane;

North West – Madibeng, Kgetlengrivier, Tswaing, Mafikeng, Ditsobotla, Ngaka Modiri Molema District Municipality, Naledi, Mamusa, Dr Ruth Segomotsi, Mompati District Municipality, City of Matlosana, Maquassi Hills, JB Marks;

Western Cape – Theewaterskloof, Laingsburg, and Beaufort West.