The City of Johannesburg, South Africa’s economic engine, is among 69 municipalities whose July equitable share transfers have been temporarily withheld by the National Treasury. This is in a sweeping crackdown on financial mismanagement and weak accountability in local government.
The unprecedented intervention also ensnares several of the country’s biggest municipalities, including Mangaung, Buffalo City, Nelson Mandela Bay, Matjhabeng, Emfuleni, City of Matlosana, Newcastle and Mafikeng. It underscores the depth of the governance crisis facing municipalities across the country.
By province, the Free State has the highest number of affected municipalities with 16, followed by the North West (12), Northern Cape (11), KwaZulu-Natal (7), Eastern Cape (6), Gauteng (6), Limpopo (5). Mpumalanga and the Western Cape each have three municipalities on the list.
Years of persistent non-compliance with MFMA
Treasury said the decision follows years of persistent non-compliance with the Municipal Finance Management Act (MFMA). This despite repeated support, training and direct engagements with struggling municipalities.
Among the failures cited are municipalities’ inability to adopt funded budgets, investigate unauthorised, irregular, fruitless and wasteful expenditure. Additional failures are the inability to recover losses from officials responsible for financial misconduct, and implement consequence management.
Treasury also found that many Municipal Public Accounts Committees were failing to perform their oversight duties, allowing billions of rands in irregular expenditure to remain unresolved.
First, measurable progress
To secure the release of the withheld funds, municipalities will have to demonstrate measurable progress rather than merely promise reforms.
Treasury has instructed them to reduce their unauthorised, irregular, fruitless and wasteful expenditure by at least 25% by the end of September. This must be supported by council resolutions, investigation reports, recovery records and recommendations from municipal public accounts committees.
They must also show that disciplinary boards are operational. Furthermore they must prove that officials implicated in financial misconduct have been investigated, and that disciplinary, civil or criminal proceedings have been instituted where warranted.
Municipalities owing money to Eskom, water boards, the South African Revenue Service (SARS), pension funds and the Auditor-General must submit signed repayment agreements before portions of the withheld allocations are released. Those that adopted unfunded budgets must also provide written undertakings to the minister of Finance that they will never again table or adopt unfunded budgets.
Poor financial governance undermines service delivery
Treasury said poor financial governance is threatening the sustainability of bulk suppliers such as Eskom and water boards. Meanwhile, late payments to statutory bodies and service providers continue to inflate costs through interest and penalties, ultimately undermining service delivery.
The intervention is supported by the latest Auditor-General findings, which show that municipalities have accumulated R145.21 billion in irregular expenditure. Moreover, R24.12 billion in fruitless and wasteful expenditure, and R118.13 billion in unauthorised expenditure since the 2021/2022 financial year has been accumulated.
The report further found that 116 municipalities adopted unfunded budgets in 2024/2025, while municipalities owed R3.4 billion in interest to Eskom and R1.21 billion to water boards.
Treasury described the withholding of funds as a corrective rather than punitive measure. It said transfers will resume once municipalities satisfy the prescribed conditions and provide proof that the required reforms have been implemented.
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- The National Treasury of South Africa has temporarily withheld July equitable share transfers from 69 municipalities, including Johannesburg and several major cities, due to financial mismanagement and poor accountability.
- The affected municipalities span multiple provinces, with the Free State having the highest number (16), followed by North West (12) and Northern Cape (11).
- Persistent issues include failure to adopt funded budgets, address irregular and wasteful expenditure, recover losses, and enforce consequence management, worsened by ineffective Municipal Public Accounts Committees.
- To regain funding, municipalities must reduce unauthorized and wasteful spending by at least 25%, implement disciplinary processes, and settle debts with entities like Eskom and water boards, supported by formal agreements and council resolutions.
- Treasury emphasized the move as corrective, not punitive, aiming to improve governance and financial sustainability to protect services and bulk suppliers, with reforms required for funds to be released.
