Treasury freezes funding for KZN, dozens of municipalities
Treasury said it would suspend July transfers to 69 municipalities across all nine provinces to "instill fiscal discipline and ensure public money is properly managed."
KwaZulu-Natal Cogta said it is working with the provincial Treasury to assist seven municipalities after the National Treasury temporarily withheld their July 2026 equitable share transfers over governance and financial compliance failures.
The affected municipalities are iMpendle, uMzinyathi District Municipality, Newcastle, eMadlangeni, Amajuba District Municipality, AbaQulusi and uMkhanyakude District Municipality.
KZN Cogta MEC Reverend Thulasizwe Buthelezi said the department respected the National Treasury’s decision, describing it as an important step towards improving financial discipline and accountability in local government.
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Buthelezi said the withholding of funds should serve as a wake-up call for the political and administrative leadership of the affected municipalities.
Our focus is to ensure that local governance in KwaZulu-Natal is ethical, sustainable and financially sound.
“While the withholding of funds is a serious measure, KZN COGTA is already actively addressing governance challenges across these municipalities,” he said.
He pointed to the recent constitutional intervention in iMpendle Municipality as an example of the department’s efforts to address persistent governance issues.
The department said it does not expect immediate service delivery disruptions because the withholding is intended as a short-term corrective measure.
However, it will closely monitor the affected municipalities to ensure essential services continue uninterrupted.
KZN Cogta, together with the provincial Treasury, will deploy specialised finance and governance experts to help the municipalities address the issues raised by the National Treasury.
The support will focus on adopting funded budgets, strengthening Municipal Public Accounts Committees to process outstanding unauthorised, irregular, fruitless and wasteful expenditure cases, and implementing consequence management in line with the Municipal Finance Management Act.
South Africa’s National Treasury said Tuesday it would withhold funding from more than a quarter of the country’s municipalities, including economic hub Johannesburg, citing financial mismanagement.
Municipalities fund themselves mainly through property rates and service charges, but also receive an equitable share of revenue from the national coffers.
Despite being home to Africa’s richest square mile, Johannesburg has grappled with the same municipal failures seen across much of South Africa, from burst water pipes and potholes to mounting garbage and decaying infrastructure.
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Treasury said it would suspend July transfers to 69 municipalities across all nine provinces to “instill fiscal discipline and ensure public money is properly managed.”
The funding cut adds to pressure on Johannesburg’s finances, with the city owing billions of rand to power and water utilities and struggling to maintain basic services, including road repairs.
Johannesburg Mayor Dada Morero did not immediately respond to a request for comment.
In May, Finance Minister threatened to withhold Johannesburg’s equitable share for July if the mayor failed to scarp a R10,3 billion ($634 million) wage offer the council made for city workers who wanted to strike last year.
Last year, President Cyril Ramaphosa lashed out at the state of the city of six million people, describing it as “not very pleasing”.
Alongside Johannesburg, funding will be withheld from municipalities including Emfuleni, where the country’s second-largest party, the Democratic Alliance, recently won a ward by-election from the African National Congress.
Other affected municipalities include Nelson Mandela Bay and Buffalo City in the Eastern Cape, Mopani in Limpopo province and Mangaung in the Free State province.
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Treasury said the move, which comes ahead of local elections in November, was not expected to affect service delivery.
Transfers will resume once affected municipalities meet Treasury’s conditions and provide proof that they have done so. One requirement is a minimum 25 percent reduction in unauthorised, irregular, fruitless and wasteful expenditure.