The National Treasury has announced that it will temporarily withhold the July 2026 equitable share transfers to a number of municipalities to enforce compliance with the Municipal Finance Management Act (MFMA) and to address persistent Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE). The measure is described as corrective, not punitive, and transfers will resume once required conditions are met and proof is submitted.

Reasons and context

• Withholding is authorised by section 216(2) of the Constitution read with section 38 of the MFMA.
• The Treasury says the action follows continued non‑compliance despite guidance, engagements and training.
• Concerned issues include unfunded budgets, failure to process UIFWE through Municipal Public Accounts Committees (MPACs), weak consequence management, late payments to Eskom, water boards and third parties, and threats to financial sustainability of suppliers and statutory bodies.
• Persistent weaknesses in municipal financial management such as UIFWE, irregular and unauthorised expenditure and deteriorating budget credibility underpin the Treasury’s decision.

Key figures

• R24.12 billion in fruitless and wasteful expenditure since 2021/22.
• R145.21 billion irregular expenditure since 2021/22 (R40.14 billion in 2024/25).
• R118.13 billion unauthorised expenditure since 2021/22 (54% non‑cash items).
• 116 municipalities (45%) adopted unfunded budgets in 2024/25.
• By 2024/25 year‑end municipalities owed R3.40 billion to Eskom and R1.21 billion to water boards.
• 48 municipalities (20%) had third‑party deductions overdue by more than one month.

Municipalities affected (listed by province)

• Eastern Cape: Buffalo City, Nelson Mandela Bay, Makana, Sundays River Valley, Inxuba Yethemba, Port St Johns.
• Free State: Mangaung, Letsemeng, Kopanong, Mohokare, Xhariep District, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng, Nketoana, Maluti‑a‑Phofung, Phumelela, Mantsopa, Ngwathe, Mafube.
• Gauteng: City of Johannesburg, Emfuleni, Lesedi, Sedibeng District, Merafong City, Rand West City.
• KwaZulu‑Natal: iMpendle, uMzinyathi District, Newcastle, eMadlangeni, Amajuba District, AbaQulusi, uMkhanyakude District.
• Limpopo: Mopani District, 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, Naledi, Mamusa, Dr Ruth Segomotsi Mompati District, City of Matlosana, Maquassi Hills, JB Marks.
• Western Cape: Theewaterskloof, Laingsburg, Beaufort West.

What municipalities must do

• Municipalities were given written notice and an opportunity to provide reasons not to withhold funds.
• Transfers will be reinstated once municipalities meet the Treasury’s conditions and submit proper proof.
• The Treasury will continue working with municipalities and provincial treasuries to strengthen financial management.