Pretoria: 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 decision was announced by Finance Minister Enoch Godongwana, alongside Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa, during a media briefing on Tuesday.
According to South African Government News Agency, the decision follows a comprehensive assessment process, which included active monitoring of compliance by the affected municipalities. National Treasury had temporarily withheld transfers under section 216(2) of the Constitution, in conjunction with the Municipal Finance Management Act, 2003 (MFMA). Despite the release, Godongwana emphasized that the affected municipalities have not yet fulfilled the requirements of the MFMA or the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
Godongwana clarified that the release of funds aims to safeguard service delivery, as the withholding had lasted nearly 30 days, concluding on Monday, 3 August. The equitable share is a vital funding source for essential services, especially for poor households. National Treasury must balance its constitutional duty to enforce financial management requirements while avoiding communities bearing the brunt of municipal failures.
The decision to release the funds is a conditional move, protecting basic service delivery while urging affected municipalities to rectify the significant weaknesses identified through the section 216(2) process. The initial withholding of shares was prompted by municipalities adopting unfunded budgets, accruing Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE), and failing to meet obligations to entities like Eskom and water boards.
As of Tuesday, 20 out of 69 affected municipalities received their full equitable share, 21 received partial allocations, while 28 have yet to receive any. Godongwana mentioned that Treasury will send letters to Premiers and MECs for Finance and CoGTA, with stringent conditions for the December 2026 instalment of the Equitable Shares. A structured compliance program will accompany the release, with a formal reporting deadline set for 30 September 2026.
Municipalities are also expected to submit quarterly reports and evidence showing progress in reducing UIFWE. By 31 October 2026, they must demonstrate processing of outstanding matters as of 30 June 2026 through legal processes. By 30 November 2026, there should be significant progress in UIFWE reduction and disciplinary processes.
The progress of municipalities will be measured by reductions in UIFWE and implementation of consequence management actions. National Treasury will assess whether matters have been addressed through necessary investigation, disciplinary, recovery, and criminal processes. Godongwana reiterated that communities should not suffer due to municipal failures, a key factor in deciding to release the remaining July 2026 transfers.
National Treasury remains committed to supporting municipalities towards compliance and helping them avoid another withholding of the equitable share. The next instalments of the equitable shares are scheduled for December this year and March 2027.
