Lesedi Local Municipality’s financial challenges have come under renewed scrutiny after the National Treasury announced that it has temporarily withheld the municipality’s July 2026 equitable share allocation due to persistent non-compliance with the Municipal Finance Management Act.

The announcement, made on July 7, forms part of a nationwide intervention affecting several municipalities that Treasury says have repeatedly failed to comply with key financial management requirements despite receiving ongoing support and guidance.

The development comes as Lesedi continues to battle a prolonged water crisis that has left thousands of residents in Ratanda, Heidelberg, Rensburg, Bergsig, Jordaan Park, Overkruin and surrounding areas without a reliable water supply for weeks.

The current crisis began after Rand Water reduced the municipality’s bulk water supply by 20% on June 17 because of outstanding debt owed by the municipality.

During a media briefing held in Ratanda following recent service delivery protests, Executive Mayor Mluleki Nkosi and Panyaza Lesufi assured residents that the outstanding debt to Rand Water would be settled within two weeks using the municipality’s equitable share allocation.

The Treasury’s decision to withhold the July allocation has now raised questions about how the municipality intends to meet that commitment.

In a statement, the National Treasury said the temporary withholding of funds is intended to enforce financial discipline and ensure municipalities comply with legislation governing the management of public finances.

According to Treasury, the affected municipalities have repeatedly failed to adopt funded budgets, address unauthorised, irregular, fruitless and wasteful expenditure, meet statutory financial obligations, and implement consequence management against officials responsible for financial misconduct.

Treasury further stated that these failures have placed increasing financial pressure on bulk service providers, including water boards and Eskom, and have negatively affected the delivery of essential municipal services.

The department also found that some municipalities had failed to investigate allegations of financial misconduct, recover financial losses where required, or institute disciplinary and criminal proceedings against responsible officials.

Treasury said the decision followed repeated engagements and interventions over an extended period, adding that the withholding of funds is a corrective measure rather than a punitive one.

The department indicated that the withheld allocation will be released once the municipality has complied with the prescribed conditions and demonstrated that it has addressed the identified shortcomings.

Responding to the announcement, Lesedi Local Municipality sought to reassure residents that there was no need for panic.

Municipal spokesperson Katleho Seaga said the municipality had noted the National Treasury statement and acknowledged the concerns it had created among residents.

“The municipality acknowledges the concerns and anxiety experienced by residents following the statement issued by the National Treasury. We understand that the information has caused uncertainty, and we wish to assure residents and all stakeholders that there is no need for panic. The municipality remains part of a multi-disciplinary technical team established to address both the municipality’s financial position and the ongoing water supply challenges. The team includes representatives from the Department of Water and Sanitation, Rand Water, the Gauteng Department of Cooperative Governance and Traditional Affairs , the Office of the Premier and the Gauteng Provincial Treasury,” he said.

“Seaga said Rand Water had reaffirmed its commitment to working with government while emphasising the need to ensure the long-term financial sustainability of Gauteng’s bulk water supply system. “With the assistance of the Gauteng Provincial Government, we are putting in place measures to improve revenue collection, contain costs and stimulate local economic development. We believe that we will resolve the matter soon and get the municipality back on track,” he said.