Billions in waste, unpaid debts to Eskom and water boards, and weak oversight have pushed local government finances to breaking point.
The city of Johannesburg. Picture: iStock
National Treasury has frozen July 2026 equitable share transfers to 60 municipalities across South Africa, citing persistent financial mismanagement and staggering levels of unauthorised, irregular, fruitless and wasteful expenditure (UIFWE).
The intervention, Treasury said, is corrective, not punitive, but underscores the scale of the municipal finance crisis.
Freeze
The suspension affects municipalities across all nine provinces, including major metros such as Johannesburg, Mangaung and Nelson Mandela Bay, as well as smaller towns like Buffalo City, Beaufort West and Port St Johns.
Councils were given written notice and the opportunity to respond before the decision was taken. Transfers will resume only once municipalities demonstrate compliance and provide proof of corrective action.
Fiscal Discipline
Treasury said the move is necessary to enforce accountability.
“Persistent non‑compliance is a dereliction of fiduciary duties and threatens financial sustainability,” the statement warned.
“Despite years of support through MFMA circulars, training and one‑on‑one engagements, many municipalities continue to adopt unfunded budgets, ignore UIFWE obligations, and fail to meet statutory commitments.”
Debt Burden
The fallout is crippling municipal finances. Municipalities collectively owe Eskom R3.40 billion in interest and water boards R1.21 billion.
“Late payments to SARS, the Auditor‑General and the FSCA undermine statutory bodies’ ability to function. Service providers face penalties and disruptions due to non‑payment, while UIFWE reflects weak governance and directly harms service delivery.”
Auditor-General
Treasury said the Auditor-General’s 2024/25 report paints a grim picture
“The latest Auditor-General of South Africa’s 2024/25 Consolidated general report on Local Government Audit Outcomes largely corroborates the findings published by the National Treasury in the 2024/25 MFMA Compliance Report about persistent weaknesses in municipal financial management”
- R24.12 billion in fruitless expenditure since 2021/22.
- R145.21 billion in irregular expenditure, including R40.14 billion in 2024/25 alone.
- R118.13 billion in unauthorised expenditure, more than half on non‑cash budget items.
- 116 municipalities adopted unfunded budgets in 2024/25.
- 48 municipalities failed to pay third‑party deductions on time.
Weak Committees
Treasury has flagged ineffective Municipal Public Accounts Committees (MPACs), which are failing to investigate UIFWE cases or enforce consequence management.
“Disciplinary boards, recovery steps and criminal referrals are largely absent, further eroding accountability,” Treasury said.
Clear Message
Treasury insists the withholding of funds will not affect service delivery in the short term, but warns that UIFWE and irregular spending are undermining governance and threatening sustainability.
“Billions lost to waste and irregular expenditure will no longer be tolerated. Municipalities must prove they can manage public money responsibly before receiving further transfers.”
