By Des Erasmus
Treasury is withholding July 2026 equitable share transfers from 69 municipalities, including the City of Johannesburg, Mangaung, Buffalo City and Nelson Mandela Bay, for councils that have failed to clean up their finances despite repeated warnings and support.
In a statement issued on Tuesday, Treasury said the funding freeze was meant to force municipalities to confront long-standing financial failures. It did not mention the rand values of the transfers being withheld.
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It said many municipalities were still failing to comply with the Municipal Finance Management Act (MFMA) in areas “insofar as they relate to adopting funded budgets, addressing UIFWE (Unauthorised, Irregular, Fruitless and Wasteful Expenditure) and ensuring that statutory commitments are met when due,” while some had “failed to show that consequence management is being implemented”.
It said the aim was “to instil fiscal discipline and ensure that public money is properly managed”.
Municipalities affected by the freeze are:
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
- Beaufort West
Treasury said in the statement that the municipalities had been “given sufficient notice in writing” and been allowed to provide reasons why their transfers should not be withheld.
It said the decision was “a corrective rather than punitive measure”.
Service delivery impact
“Because the withholding of the funds will be for a short-term period, the National Treasury does not foresee any impact on service delivery,” it said.
The move strikes at a long-running breakdown in municipal financial governance, including councils failing to adopt funded budgets, pay statutory commitments and deal properly with UIFWE.
Treasury said non-compliance was “not only a dereliction of fiduciary duties by the political and administrative leadership of municipalities,” but was also threatening the financial sustainability of water boards and Eskom.
It said persistent UIFWE pointed to weak governance and could damage service delivery where financial losses were involved.
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It also said failure to pay service providers created “fruitless and wasteful expenditure due to interest and penalties charged and service delivery disruptions”.
It said some municipalities had failed to process UIFWE through their Municipal Public Accounts Committees, which are meant to drive accountability.
Others had failed to show timely consequence management, including disciplinary referrals, investigations, recovery steps and criminal referrals where required.
It cited the Auditor-General’s 2024/25 local government audit outcomes, saying municipalities had incurred R24.12 billion in fruitless and wasteful expenditure since 2021/22, R145.21 billion in irregular expenditure over the same period, and R118.13 billion in unauthorised expenditure.
It said 116 municipalities adopted unfunded budgets in 2024/25, while municipalities owed R3.40 billion in interest to Eskom and R1.21 billion to water boards by year-end.
Release of funds
To get the July funds released, the municipalities must achieve “a minimum 25% reduction in the total UIFWE balance” based on unaudited 2025/26 financial statements, with the reduction measured by 30 September 2026 or earlier after 31 July.
Municipalities must also prove their disciplinary boards are legally appointed, active and functional. They must show progress on financial misconduct matters, including disciplinary action, civil recovery steps and criminal proceedings where applicable.
Where municipalities owe bulk suppliers or third parties, including water boards, Eskom, SARS, the AG and pension funds, they must submit signed payment agreements.
Treasury said it would release money linked to invoices and agreements, but would release remaining balances only after receiving evidence that earlier funds were used as intended.
Unfunded adjustment budgets
For councils that adopted unfunded 2025/26 adjustment budgets, their mayors must write to the finance minister committing that, from 2026/27, they will “never again allow their municipalities to table and adopt an unfunded budget in future”.
“Transfers will resume once the affected municipalities meet the required conditions and submit proper proof of the conditions being met,” Treasury said.
