The Merafong City Local Municipality is among the municipalities that will not receive their July 2026 equitable share transfers from National Treasury due to their continued financial mismanagement.

National Treasury listed Merafong on July 7 as one of the more than 60 municipalities that will be punished in this way.

According to the National Treasury, the action is being done “to instill fiscal discipline and ensure that public money is properly managed; that unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) is addressed; and that municipal officials and office-bearers are held accountable where required by law”.

The decision follows Merafong’s persistent and serious non-compliance with the Municipal Finance Management Act (MFMA) and its supporting regulations, despite support provided by the National Treasury.

This included guidance, engagement, and formal or informal communication.

In Gauteng, our neighbours, Rand West and Sedibeng, are among the other affected municipalities. The JB Marks Municipality in Potchefstroom is also on the list of non-compliers.

According to the National Treasury, Merafong and the other listed municipalities have been given sufficient notice in writing and urged to take measures to change their financial management positions ahead of the withholding of funds.

They were also given a platform to send, in writing, reasons why their funds should not be withheld.
The temporary withholding of funds is taken in terms of section 216(2) of the Constitution, read with section 38 of the Local Government: Municipal Finance Management Act 56 of 2003 (MFMA).

National Treasury indicated that this is a corrective rather than punitive measure.

Because the withholding of the funds will be for a short-term period, they do not foresee any impact on service delivery.

Before the withholding of funds, the National Treasury had provided support to municipalities through the issuance of MFMA Circulars, which guided them on what they must do to ensure compliance with specific provisions of the MFMA and its regulations; through one-on-one municipal engagements; and through various training interventions either directly with the municipalities or through nationally or provincially facilitated forums.

Despite these support interventions, municipalities such as Merafong are still failing to comply with the provisions of the MFMA and its supporting regulations insofar as they relate to adopting funded budgets, addressing UIFWE, and ensuring that statutory commitments are met when due.

Non-compliance with the legislation is not only a dereliction of fiduciary duties by the political and administrative leadership of municipalities, but it is also threatening the financial sustainability of bulk suppliers (water boards and Eskom).

In addition, failure to pay third parties negatively impacts the ability of statutory bodies to continue operating optimally.

Transfers will resume once the affected municipalities meet the required conditions and submit proper proof of the conditions being met.

National Treasury will keep working with municipalities, provincial treasuries, and cooperative governance structures to strengthen sound financial management.