National Treasury has temporarily withheld the July 2026 equitable share transfers from 69 municipalities across the country, including the Emfuleni Local Municipality, Lesedi Local Municipality, and Sedibeng District Municipality.

Other Gauteng municipalities affected by this decision include the City of Johannesburg, Merafong City, and Rand West City.

National Treasury cites persistent and serious non-compliance with the Municipal Finance Management Act (MFMA) and its supporting regulations as the reason for this decision. The move aims to instill fiscal discipline and proper management of public funds, ensure that Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE) is addressed, and hold municipal officials and office-bearers accountable.

National Treasury notes that this is a corrective rather than a punitive measure and does not see any impact on service delivery because the funds will be withheld for a short period. Before the withholding of funds, Treasury provided support to municipalities through the issuance of MFMA Circulars, which guide municipalities on compliance.

Despite these support interventions, many municipalities still fail to comply with the provisions of the MFMA and its supporting regulations regarding adopting funded budgets, addressing UIFWE, and ensuring that statutory commitments are met when due.

Treasury views non-compliance with the legislation as a dereliction of fiduciary duties by the political and administrative leadership of municipalities. It also states that non-compliance threatens the financial sustainability of bulk suppliers, such as water boards and Eskom.

In addition, the failure to pay third parties negatively impacts the ability of statutory bodies to continue operating optimally, including the Auditor-General of South Africa, the South African Revenue Service, and the Financial Sector Conduct Authority.

According to the National Treasury, consistently incurring UIFWE indicates weak governance within municipalities, and instances accompanied by financial losses negatively impact service delivery.

Furthermore, the non-payment of service providers results in fruitless and wasteful expenditure due to interest and penalties charged, which causes service delivery disruptions. Some of the affected municipalities also fail to show that consequence management is being implemented.

Treasury said that transfers will resume once the affected municipalities meet the required conditions and submit proper proof of compliance.

National Treasury reaffirms its commitment to working with municipalities, provincial treasuries, and cooperative governance structures to strengthen sound financial management.