28 July 2026
Minister of Finance Enoch Godongwana has warned that non-compliant municipalities are “not off the hook”. Archive photo: Ashraf Hendricks.
The National Treasury will unfreeze equitable share transfers to a number of local municipalities by 31 July, but Minister of Finance Enoch Godongwana has warned that non-compliant municipalities are “not off the hook”.
Earlier this month, the Treasury froze R13.5-billion to 69 municipalities to “instil fiscal discipline” after “persistent and serious non-compliance with the Municipal Finance Management Act”.
Godongwana made the announcement at a joint media briefing with Minister of Cooperative Governance and Traditional Affairs (COGTA) Velenkosini Hlabisa on Tuesday.
Godongwana said the Treasury wanted to avoid “adverse” effects on municipal services. He said the Treasury must “balance its constitutional responsibility to enforce financial management requirements with the need to avoid communities carrying the immediate consequences of failure by municipal institutions and officials”.
The transfers will be “conditional” on municipalities addressing their financial non-compliance.
Of the 69 municipalities who had their funding withheld, 20 have received their equitable share in full, 21 have received partial funding, and 28 will receive their equitable share by the end of the month.
Godongwana said municipalities would be “required to perform between now and the second tranche” and would receive letters outlining their conditions.
He said similar letters would be sent to the provincial MECs and premiers to work with COGTA and Treasury to assist these municipalities.
Hlabisa said the funds “must be used prudently”. He urged municipalities to stop adopting unfunded budgets.
He also urged the labour sector to engage with the government and help municipalities correct their financial management.
On 24 July, the South African Municipal Workers’ Union had condemned Treasury’s decision to freeze the funds as “reckless and irrational”, noting that several municipalities had said they could not pay municipal workers’ salaries until their equitable allocation was paid.
Hlabisa said municipalities who are not financially compliant will be monitored “closely” so employees are not affected.
Godongwana noted that some municipalities would have had difficulty paying workers, even if the Treasury had not withheld funds.
Hlabisa called on South Africans to register to vote before the upcoming local elections in November. “For municipalities to function, we should have competent councillors. They don’t elect themselves. They are elected by the people of South Africa. If you want to fix municipalities, fix who becomes a councillor.”
“Go and vote for people who will serve you,” he said.
