The South African Local Government Association (Salga) has accused National Treasury of mishandling the process that led to the withholding of the December 2025 local government equitable share.
The equitable share consists of funds generated from tax revenue and distributed to provincial and local governments to assist them in delivering service.
Salga spokesperson Motalatale Modiba warned that the decision has pushed dozens of municipalities deeper into financial distress, placing service delivery and community stability at risk.
75 municipalities affected
The decision has affected at least 75 municipalities, many of which rely on the equitable share to maintain basic services.
The association has written to the National Treasury to raise concerns about the process of blocking the payment.
The withheld funds support essential municipal operations, such as water provision, electricity services, refuse removal, and the payment of staff salaries.
With the December period already under pressure due to increased demand for services, Salga said the delay could not have come at a worse time.
“Since September 2025, National Treasury issued two circulars outlining its intention to invoke Section 216 (2) of the constitution and Section 38 of the Municipal Finance Management Act 56 of 2003. These measures permitted the withdrawal of the local government equitable share, which supports critical municipal functions.
“In response, Salga made multiple attempts to engage with National Treasury to prevent the risk of withholding and to ensure that affected municipalities could comply with legislative requirements before the scheduled payment of the December tranche,” said Modiba.
Municipalities not properly informed
He said these efforts were unsuccessful and criticised the Treasury for failing to cooperate and creating an unclear and inconsistent process that left municipalities confused about what was required of them.
Often, he said, municipalities were not properly informed about deadlines, required documentation, or whether their submissions were adequate.
He said even where municipalities responded to Treasury’s requests, they received no feedback before the funds were withheld, leaving them in the dark and unable to resolve any outstanding issues in time.
“Salga has called on the National Treasury to immediately release the local government equitable share tranche for all municipalities that have adequately responded and complied with the requirements.
“In addition, Salga advocates for the establishment of a formal, transparent, and time-bound process within the Division of Revenue Bill for the withholding of equitable share allocations.
“Salga also recommends that structural engagements be facilitated through intergovernmental relations platforms to improve coordination and oversight,” said Modiba.
Financial oversight rules
Modiba stressed that the association also urged Treasury to apply financial oversight rules consistently across all spheres of government, including national and provincial departments that owe municipalities money or fail to comply with spending regulations.
“The association urges the National Treasury to apply Section 216 (2) and Section 6 (2) (f) of the Public Management Finance Act consistently, not only to municipalities but also to government departments and entities that owe municipalities or are non-compliant with the unauthorised, irregular, fruitless and wasteful expenditure regulations.
“This approach is essential to uphold fairness and accountability across all spheres of government.”
He said they will continue engaging with Treasury to secure the release of the outstanding funds and protect service delivery at the local government level.
