The Free State Finance, Economic Development and Tourism MEC Ketso Makume has thrown his weight behind the National Treasury’s decision to temporarily withhold local government equitable share transfers from several municipalities in a bid to strengthen financial governance and accountability.
Why National Treasury Is Withholding Municipal Funds
The intervention, implemented in terms of Section 216(2) of the Constitution and Section 38 of the Municipal Finance Management Act (MFMA), follows what National Treasury described as persistent non-compliance with financial management regulations by affected municipalities despite receiving extensive support from national and provincial authorities.
Makume said the measure should be viewed as a corrective intervention rather than a punishment, stressing that its purpose is to improve financial discipline and ensure public funds are managed lawfully and responsibly.
Which Free State Municipalities Are Affected?
The Free State is among the provinces most affected by the decision, with municipalities including Mangaung Metro, Letsemeng, Kopanong, Mohokare, Xhariep District Municipality, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe and Mafube subjected to the temporary withholding of transfers.
According to National Treasury, municipalities will have access to the withheld funds once they demonstrate compliance with a set of prescribed conditions aimed at improving financial governance.
Trade union Samwu, federation Cosatu and SACP have lambasted the Treasury’s move, saying it will leave workers worse off.
Conditions for Releasing Withheld Public Funds
These conditions include reducing unauthorised, irregular, fruitless and wasteful expenditure, implementing consequence management for financial misconduct, meeting payment obligations to creditors such as Eskom and water boards, and adopting funded budgets that comply with the MFMA.
Makume said the requirements aligned with the principles of sound financial management that the Provincial Treasury has consistently promoted through its municipal support programmes.
How Municipal Financial Mismanagement Affects Public Services
“Every rand allocated to municipalities is intended to improve the lives of our communities. We therefore have a collective responsibility to ensure that public funds are managed transparently, lawfully and efficiently. Sound financial governance is not optional – it is fundamental to sustainable service delivery and public confidence,” he said.
Provincial Support and Financial Recovery Actions
Provincial Treasury has already begun engaging affected municipalities to assess their circumstances and develop tailored support plans to help them meet the conditions required for the release of the withheld funds.
The support will include technical assistance to reduce and properly process unauthorised, irregular, fruitless and wasteful expenditure, strengthen Municipal Public Accounts Committee processes, improve budget compliance and financial recovery planning, enhance cash-flow management, and improve overall financial governance and reporting.
Makume has called on municipal accounting officers, executive mayors and councils to act urgently and work together to ensure the required evidence is submitted within the stipulated deadlines.
He also urged municipalities that were not affected by the intervention to use the development as an opportunity to strengthen compliance and address governance weaknesses before similar corrective measures become necessary.
Provincial Treasury said it remains committed to working with National Treasury, the Department of Cooperative Governance and Traditional Affairs, municipalities and other stakeholders to improve financial sustainability and service delivery across the province.
- Free State MEC Ketso Makume supports National Treasury’s decision to temporarily withhold equitable share transfers from several municipalities to enforce better financial governance and accountability.
- The intervention targets municipalities with persistent non-compliance in financial management, affecting many in Free State, including Mangaung Metro and Maluti-a-Phofung, under constitutional and MFMA provisions.
- National Treasury will release withheld funds once municipalities meet conditions like reducing irregular expenditure, implementing consequences for misconduct, and ensuring compliant budgets.
- Trade unions Samwu, Cosatu, and SACP criticize the move, expressing concerns it will negatively impact workers.
- Provincial Treasury is providing technical support and engaging municipalities to improve compliance, urging urgent collective action to meet requirements and enhance sustainable service delivery.
Makume said the measure should be viewed as a corrective intervention rather than a punishment, stressing that its purpose is to improve financial discipline and ensure public funds are managed lawfully and responsibly.
Trade union Samwu, federation Cosatu and SACP have lambasted the Treasury's move, saying it will leave workers worse off.
Makume said the requirements aligned with the principles of sound financial management that the Provincial Treasury has consistently promoted through its municipal support programmes.
“Every rand allocated to municipalities is intended to improve the lives of our communities. We therefore have a collective responsibility to ensure that public funds are managed transparently, lawfully and efficiently.
Provincial Treasury has already begun engaging affected municipalities to assess their circumstances and develop tailored support plans to help them meet the conditions required for the release of the withheld funds.
Makume has called on municipal accounting officers, executive mayors and councils to act urgently and work together to ensure the required evidence is submitted within the stipulated deadlines.
He also urged municipalities that were not affected by the intervention to use the development as an opportunity to strengthen compliance and address governance weaknesses before similar corrective measures become necessary.
Provincial Treasury said it remains committed to working with National Treasury, the Department of Cooperative Governance and Traditional Affairs, municipalities and other stakeholders to improve financial sustainability and service delivery across the province.
