The uMzinyathi District Municipality is among 60 municipalities across South Africa affected by National Treasury’s decision to withhold grant funding because of ongoing financial mismanagement and poor compliance.

The move follows years of unauthorised, irregular, fruitless and wasteful expenditure, with Treasury describing the intervention as corrective rather than punitive.

Treasury raises alarm

In a statement, National Treasury said municipalities had accumulated R145.21 billion in irregular expenditure since 2021, including R40.14 billion during the 2024/25 financial year alone.

Municipalities were given written notice and an opportunity to respond before the decision was taken. Grant payments will resume only after affected municipalities demonstrate compliance and provide evidence that corrective measures have been implemented.

“Despite years of support through Municipal Finance Management Act circulars, training and one-on-one engagements, many municipalities continue to adopt unfunded budgets, ignore unauthorised, irregular, fruitless and wasteful expenditure obligations, and fail to meet statutory commitments,” Treasury said.

The department added that municipalities collectively owe Eskom R3.40 billion in interest and water boards R1.21 billion.

Treasury also warned that late payments to the South African Revenue Service, the Auditor-General of South Africa and the Financial Sector Conduct Authority undermine the functioning of these institutions, while poor financial governance continues to disrupt service delivery.

The Auditor-General’s 2024/25 consolidated report on local government echoed Treasury’s concerns, highlighting persistent weaknesses in municipal financial management.

Endumeni budget remains unresolved

Treasury further revealed that about 116 of South Africa’s 257 municipalities have adopted unfunded budgets, creating an estimated combined funding shortfall of R288 billion.

Closer to home, Endumeni Local Municipality has again failed to pass an unfunded budget. Councillors missed the statutory deadline of June 30 after the proposed budget was rejected by a majority of councillors.

The KwaZulu-Natal Provincial Government has given the council until July 13 to approve the budget, failing which provincial intervention is expected.

The Democratic Alliance and African National Congress voted against the budget, while the Inkatha Freedom Party supported it, resulting in a 7-6 vote against its adoption.

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