National Treasury will release the remaining July 2026 equitable share allocation previously withheld from municipalities with a view of protecting communities from the “consequences of failures” by municipalities.
This according to Finance Minister Enoch Godongwana who, together with Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa, briefed the media on Tuesday.
“The decision follows the comprehensive assessment process undertaken, including the active monitoring of compliance by the affected municipalities after National Treasury temporarily withheld transfers in terms of section 216(2) of the Constitution, read with the applicable provisions of the Municipal Finance Management Act, 2003 (MFMA).
“I wish to make it clear that the decision to release the remaining transfers 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 in my letters addressed to the respective mayors and the press statement released by the department earlier this month,” he said.
Godongwana explained that National Treasury is releasing the funds to protect service delivery.
“National Treasury has decided to release funding… because we have withheld it for close to 30 days which ends on Monday, 3 August, and 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. National Treasury must therefore balance its constitutional responsibility to enforce financial management requirements; with the need to avoid communities carrying the immediate consequences of failures by municipal institutions and officials.
“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,” he noted.
The next step
The move to withhold shares was taken after some municipalities continued to adopt unfunded budgets, accumulate Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE) and fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.
As of Tuesday, some 20 of the initial 69 affected municipalities have already received their full equitable share, 21 have received partial allocations and the remaining 28 have not received allocations to date.
As the allocations are released, Godongwana noted that Treasury will follow this up with:
- Letters to Premiers with strict conditions for consideration in withholding the December 2026 instalment of the Equitable Shares;
- Letters to both MECs for Finance and CoGTA with strict conditions for consideration in withholding the December 2026 instalment of the Equitable Shares; and
- A structured compliance programme will accompany the release. The first formal reporting deadline remains 30 September 2026, in accordance with my July 2026 letter.
Municipalities are also required to submit quarterly reports and supporting evidence.
“They must also demonstrate achievement of the applicable UIFWE processing and reduction requirements. National Treasury will then require further measurable improvement during October and November 2026.
“By 31 October 2026, affected municipalities must demonstrate processing of matters outstanding as at 30 June 2026 through the required legal processes.
“By 30 November 2026, there should be a demonstrable increase in the number of matters as at 30 June 2026 that have progressed through the UIFWE reduction and disciplinary board processes to conclusion,” Godongwana highlighted.
Municipalities’ progress will be measured in reductions in UIFWE as well as the implementation of consequence management actions.
The National Treasury will “assess whether matters have moved through the required investigation, disciplinary, recovery and criminal processes”.
“National Treasury recognises that communities should not carry the immediate consequences of failures by municipal institutions. That consideration is central to the decision to release the remaining July 2026 transfers.
“National Treasury remains committed to support municipalities during this period on their road to compliance and to assist municipalities in avoiding another withholding of the equitable share,” Godongwana concluded.
The next tranches of the equitable shares are expected to be disbursed in December this year and March 2027. – SAnews.gov.za
