Finance Minister Enoch Godongwana has reiterated that temporarily withholding July 2026 equitable shares from municipalities is instrumental to ensure compliance with the law and improving service delivery.
The Minister was speaking to SAnews on the sidelines of a media briefing on Friday, following the announcement that 69 municipalities have had their July 2026 equitable shares withheld due to non-compliance.
The move was taken after municipalities continued to:
• Adopt unfunded budgets;
• Accumulate Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE);
• Fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.
“We have been doing it every year but on a smaller scale. Of this size, we’ve last done it in 2016. Every year, we’re fighting with municipalities. Sometimes we take money from one municipality to another, we say to a municipality: you are not performing and we will take your equitable share.
“It’s precisely this that will enhance service delivery because we are forcing municipalities to perform. It’s going to improve and enhance,” he said.
Godongwana explained to SAnews the steps that municipalities can take to have their shares released.
“Depending on what the offence is. If your offense is that you have an unfunded budget, you’ve got to sit with the Treasury officials and develop steps for transforming that budget in the long term to become a funded budget. Once we have got an agreement…you’ll be off the list.
“If you have not paid creditors, we need an indication of a payment schedule where you make a commitment that over time, you are going to pay your relevant creditors.
“The third offense is…fruitless and wasteful expenditure. The Auditor General has made a decision. At a municipal level…they’ve got MPAC [Municipal Public Accounts Committee]. MPAC sits looks at the decision of the AG and make a recommendation to the council. The council must sit…and say here are the recommendations, we are approving it and there must be consequence management, if necessary,” he said.
Some municipalities have already satisfied Treasury requirements and will have their equitable share, or part thereof, released next week.
The Minister emphasised that for government reforms to truly take root, all state institutions must fully participate.
“Reforms must be accompanied by making sure that people are performing. If you have reforms and you don’t have willing partners to participate, the reforms are not going to effective,” Godongwana said.
In a press statement, Treasury described the municipal finance picture as “sobering”, noting that:
• Since 2021–22, municipalities have incurred R24.12 billion in fruitless and wasteful expenditure.
• They have accumulated R145.21 billion in irregular expenditure, with R40.14 billion in 2024–25 alone.
• They have disclosed R118.13 billion in unauthorised expenditure, more than half of which was on non-cash budget items.
“This threatens the financial sustainability of bulk suppliers, undermines statutory bodies, and disrupts service delivery. Non-payment of service providers results in penalties, interest charges, and service interruptions.
“Weak governance and failure to process UIFWE [Unauthorised, Irregular, Fruitless and Wasteful Expenditure] through Municipal Public Accounts Committees erode accountability and public trust.
“South Africans deserve municipalities that are financially sound, accountable, and capable of delivering services. By invoking the Constitution, we are signalling seriousness about governance, fiscal responsibility, and the rule of law,” Godongwana said.
The Minister was speaking to SAnews on the sidelines of a media briefing on Friday, following the announcement that 69 municipalities have had their July 2026 equitable shares withheld due to non-compliance.
The move was taken after municipalities continued to:
• Adopt unfunded budgets;
• Accumulate Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE);
• Fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.
“We have been doing it every year but on a smaller scale. Of this size, we’ve last done it in 2016. Every year, we’re fighting with municipalities. Sometimes we take money from one municipality to another, we say to a municipality: you are not performing and we will take your equitable share.
“It’s precisely this that will enhance service delivery because we are forcing municipalities to perform. It’s going to improve and enhance,” he said.
Godongwana explained to SAnews the steps that municipalities can take to have their shares released.
“Depending on what the offence is. If your offense is that you have an unfunded budget, you’ve got to sit with the Treasury officials and develop steps for transforming that budget in the long term to become a funded budget. Once we have got an agreement…you’ll be off the list.
“If you have not paid creditors, we need an indication of a payment schedule where you make a commitment that over time, you are going to pay your relevant creditors.
“The third offense is…fruitless and wasteful expenditure. The Auditor General has made a decision. At a municipal level…they’ve got MPAC [Municipal Public Accounts Committee]. MPAC sits looks at the decision of the AG and make a recommendation to the council. The council must sit…and say here are the recommendations, we are approving it and there must be consequence management, if necessary,” he said.
Some municipalities have already satisfied Treasury requirements and will have their equitable share, or part thereof, released next week.
The Minister emphasised that for government reforms to truly take root, all state institutions must fully participate.
“Reforms must be accompanied by making sure that people are performing. If you have reforms and you don’t have willing partners to participate, the reforms are not going to effective,” Godongwana said.
In a press statement, Treasury described the municipal finance picture as “sobering”, noting that:
• Since 2021–22, municipalities have incurred R24.12 billion in fruitless and wasteful expenditure.
• They have accumulated R145.21 billion in irregular expenditure, with R40.14 billion in 2024–25 alone.
• They have disclosed R118.13 billion in unauthorised expenditure, more than half of which was on non-cash budget items.
“This threatens the financial sustainability of bulk suppliers, undermines statutory bodies, and disrupts service delivery. Non-payment of service providers results in penalties, interest charges, and service interruptions.
“Weak governance and failure to process UIFWE [Unauthorised, Irregular, Fruitless and Wasteful Expenditure] through Municipal Public Accounts Committees erode accountability and public trust.
“South Africans deserve municipalities that are financially sound, accountable, and capable of delivering services. By invoking the Constitution, we are signalling seriousness about governance, fiscal responsibility, and the rule of law,” Godongwana said.
