Godongwana to release municipal equitable share to municipalities by July 31

The National Treasury has started disbursing equitable share funds to municipalities that had their funding withheld due to non-compliance with Treasury regulations.

By Friday, all 69 municipalities that were sanctioned by the Treasury will breathe a sigh of temporary relief.

However, finance minister Enoch Godongwana said this concession does not mean the affected municipalities have escaped scrutiny.

“The decision follows the comprehensive assessment process undertaken, including the monitoring of compliance by the affected municipalities after the National Treasury temporarily withheld transfers in terms of section 216(2) of the constitution read with the applicable provisions of the Municipal Finance Management Act.

“The release is therefore not based on a finding of compliance; rather, the National Treasury has decided to release funding because we have withheld it for close to 30 days, which ends on Monday next week.”

He said his team considered the impact withholding funds would have on the most vulnerable residents as a result of the failures of the municipality.

“This is to avoid having an adverse short- [to] medium-term effect on the delivery of basic municipal services. The equitable share is an important source of funding for basic services, particularly services provided for poor households.

“The National Treasury must therefore balance its constitutional responsibility to enforce its financial management requirements with the need to avoid communities carrying the immediate consequences of failure by municipal institutions and officials.

“The release must accordingly be understood as a conditional release intended to protect basic service delivery while requiring affected municipalities to correct the serious weaknesses identified.”

Godongwana reported that 20 of the 69 municipalities have already received the full equitable share.

He said the rest would receive their outstanding funds by Friday. Of this number, 21 have received part of their allocated share, while 28 will receive the full amount on Friday.

“The process from here is that they are not off the hook. They are going to be required to perform between now and the second tranche. Each municipality will receive a letter informing them of the conditions attached and what it ought to do between now and the next tranche.”

Similar letters will also be sent to the MECs of local government and finance in each province, and the premiers.

The process from here is that they are not off the hook. They are going to be required to perform between now and the second tranche.

—  Enoch Godongwana

“This is to enable them to work with us in assisting those municipalities so that come the next tranche, there will be no need to withdraw the equitable share; all of them would have complied and met the requirements.”

Godongwana said the National Treasury believes that communities should not carry the immediate consequences of failure by municipal institutions.

“This consideration is central to the decision to release the remaining July 2026 transfers. The purpose of this conditional release is twofold — it protects basic service delivery in the immediate term and places affected municipalities on clear notice that measurable corrective action is required.

“The National Treasury remains committed to supporting municipalities during this period on their road to compliance and to assist municipalities in avoiding another withholding of the equitable share in December 2026 and March 2027.”

Co-operative governance and traditional affairs minister (Cogta) Velenkosini Hlabisa said: “There is common agreement between Cogta and the Treasury that municipalities must comply. The money allocated to them should be used prudently, and for every organ of the state that needs to be paid, the obligation lies with the municipalities to do so.”

The South African Local Government Association would also be part of the support structure to ensure compliance by municipalities.

He added that those owing money to municipalities should suffer a similar fate, as municipalities cannot commit to their financial obligations to water boards, Eskom and medical and pension funds when they aren’t paid by those who owe them.

“A simple message to all our municipalities: when communication letters are sent, municipalities must respond. We’ve also agreed that all national and provincial departments that owe billions of rand to municipalities must be subjected to a similar approach.”

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