Newcastle Municipality is one of several local municipalities and metropolitan municipalities that will not receive their equitable share allocations for July.

According to the National Treasury, this decision follows serious concerns over the mismanagement of public funds.

The temporary withholding of funds is intended to strengthen fiscal discipline, ensure public money is properly managed, and hold municipal officials and office bearers accountable where required by law.

Equitable share allocations are paid to municipalities to help fund the delivery of basic services, including water, sanitation and electricity.

According to a National Treasury media statement, Newcastle is among the affected municipalities in KwaZulu-Natal, alongside iMpendle, uMzinyathi District Municipality, eMadlangeni, Amajuba District Municipality, AbaQulusi and uMkhanyakude District Municipality.

Newcastle cited for financial non-compliance

National Treasury stated that Newcastle’s July 2026 equitable share transfer has been temporarily withheld because of persistent non-compliance with the Municipal Finance Management Act (MFMA) and related financial management requirements.

The Treasury said the affected municipalities were given written notice well in advance and were urged to improve their financial management before the funds were withheld.

Municipalities were also given an opportunity to submit written representations explaining why their funding should not be withheld.

National Treasury added that it had supported municipalities by issuing MFMA circulars outlining the steps required to comply with the Act and its regulations.

Despite these interventions, many municipalities continued to fail to comply with the MFMA, particularly in adopting funded budgets; addressing unauthorised, irregular, fruitless and wasteful expenditure (UIFWE); and ensuring statutory commitments were met on time.

The Treasury said non-compliance not only represents a failure of fiduciary responsibility by municipal political and administrative leadership, but also threatens the financial sustainability of bulk suppliers, including water boards and Eskom.

It added that failure to pay third parties also affects the ability of statutory bodies to operate effectively. These include the Auditor-General of South Africa (AGSA), the South African Revenue Service (SARS) and the Financial Sector Conduct Authority (FSCA).

Treasury says intervention aims to improve accountability

According to the Treasury, consistently incurring unauthorised, irregular, fruitless and wasteful expenditure is an indication of weak governance within municipalities. Where such expenditure results in financial losses, it also has a negative impact on service delivery.

The Treasury further noted that the non-payment of service providers often leads to additional fruitless and wasteful expenditure through interest charges and penalties, while also causing service delivery disruptions.

It said some municipalities had also failed to demonstrate that consequence management had been implemented. This includes referrals to disciplinary boards, investigations, disciplinary action, recovery measures and criminal referrals where required.

The latest Auditor-General report for the 2024/25 financial year found that the affected municipalities had collectively incurred billions of rand in fruitless and wasteful expenditure.

The Treasury described the intervention as corrective rather than punitive. It is intended to improve financial discipline; address unauthorised, irregular, fruitless and wasteful expenditure; ensure accountability for financial misconduct; and require municipalities to demonstrate compliance before the withheld funds are released.

The statement added that the withholding of funds is temporary and that transfers will resume once the municipality has met the required conditions and provided evidence that those conditions have been satisfied.

The news provided to you in this link has been investigated and compiled by the editorial staff of the Newcastle Advertiser, a sold newspaper distributed in the Newcastle area. Please follow us on Youtube and feel free to like, comment, and subscribe. For more local news, visit our webpage, follow us on Facebook and Twitter, and request an add on our WhatsApp (082 874 5550).