Six Eastern Cape municipalities hit by Treasury funding freeze

National Treasury has announced that it is temporarily withholding the July 2026 equitable share transfers to 69 municipalities across South Africa in an effort to strengthen financial management and improve accountability.

Six Eastern Cape municipalities are among those affected: Buffalo City Metro, Nelson Mandela Bay Metro, Makana, Sundays River Valley, Inxuba Yethemba and Port St Johns.

In a media statement issued on Tuesday, Treasury said the decision follows “persistent and serious non-compliance” with the Municipal Finance Management Act (MFMA) and its supporting regulations, despite support provided through guidance, engagements and formal and informal communication with municipalities.

Treasury said the temporary withholding is intended to instil fiscal discipline, ensure public money is properly managed, address unauthorised, irregular, fruitless and wasteful expenditure, and hold municipal officials and office-bearers accountable where required by law.

According to the statement, the affected municipalities were notified in writing and given an opportunity to explain why their funding should not be withheld before the decision was implemented. Treasury stressed that the measure is corrective rather than punitive and does not expect it to affect service delivery because the withholding will be for a short period.

Treasury said many municipalities continue to fail to comply with the MFMA, including adopting funded budgets, dealing with unauthorised, irregular, fruitless and wasteful expenditure, and meeting their statutory financial obligations. It also raised concerns about weak consequence management and the failure of some municipalities to investigate financial misconduct and recover losses where required.

The department said the latest Auditor-General’s 2024/25 local government audit outcomes support its findings. Among the issues highlighted were R24.12 billion in fruitless and wasteful expenditure since 2021/22, R145.21 billion in irregular expenditure, and R118.13 billion in unauthorised expenditure. Treasury also noted that 116 municipalities adopted unfunded budgets during the 2024/25 financial year.

Treasury said the withheld transfers will be released once affected municipalities meet the required conditions and provide proof that those conditions have been fulfilled.