Finance Minister Enoch Godongwana has announced that the National Treasury will begin releasing the remaining July 2026 Equitable Share Transfers to municipalities before the end of the month, to avoid adversely affecting service delivery.
Earlier this month, Treasury said it would withhold R13.5 billion from selected municipalities that have “persistently failed to adhere to the Municipal Finance Management Act, with billions of rand going to waste.”
The 69 municipalities included the City of Johannesburg, Mangaung, Nelson Mandela Bay and three Western Cape municipalities – Theewaterskloof, Laingsburg and Beaufort West.
In an announcement today, 28 July, Godongwana said the decision to release the funds does not mean that the affected municipalities have satisfied the requirements of the MFMA, the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, or the requirements previously communicated.
He says the move is purely to avoid having an adverse short- to medium-term effect on the delivery of basic municipal services.
The equitable share is an important source of funding for basic services, particularly services provided to poor households.
“The release must accordingly be understood as a conditional release, intended to protect basic service delivery while requiring affected municipalities to correct the serious weaknesses identified through the section 216(2) process.”
Godongwana says the section 216 (2) process has revealed that the challenges extend beyond isolated cases of Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE).
“They point to wider weaknesses in municipal budgeting, cash-flow management, financial oversight, accountability and consequence management. Of particular concern is the apparent disconnect between some municipal budget assumptions and the actual financial position revealed during the withholding process. The immediate financial pressure experienced following the temporary withholding raises questions about whether municipal budgets adequately reflect actual cash resources, credible collection rates, outstanding creditors, bulk-service obligations, employee costs and existing financial commitments.”
The Minister says the assessments have also identified material weaknesses in municipal governance and oversight.
“National Treasury is concerned that, in a number of cases, Municipal Councils, Municipal Public Accounts Committees, accounting officers, senior managers, disciplinary boards and other municipal officials have not adequately performed the duties assigned to them.”
Godongwana says the failures include delays in processing UIFWE, weak or incomplete investigations, failures to obtain supporting evidence, failures to institute disciplinary proceedings and failures to implement consequence management.
The Minister says should municipalities fail to meet Treasury’s strict conditions, he will consider withholding the December 2026 instalment of Equitable Shares.
Affected municipalities will need to adhere to a structured compliance programme, with the first formal reporting deadline being 30 September.
National Treasury will then require measurable improvement during October and November 2026.
Godongwana concluded that communities should not bear the consequences of failures by municipal institutions, but at the same time, municipalities are on notice that they could face another withholding of the equitable share in December 2026 and March 2027, should they fail to address wasteful expenditure.
