42 errant municipalities off Godongwana’s naughty list
· Citizen
National Treasury says it has reinstated the July equitable share allocation to 42 of 69 municipalities that had their funds frozen over failure to address governance or financial shortcomings.
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Finance Minister Enoch Godongwana halted the payments, saying they would be released only when the municipalities had tabled plans to get their house in order.
Godongwana’s corrective measures were largely welcomed, but some members of parliament remain divided on his approach.
The Financial and Fiscal Commission (FFC), which advises government and parliament on financial matters, called for the decision to be scrutinised in a joint sitting on Friday.
Godongwana, Minister of Cooperative Governance and Traditional Affairs (Cogta) Velenkosini Hlabisa and the chairs of parliament’s various portfolio committees met on Friday, with officials from National Treasury briefing MPs on progress to date.
“Already, 42 of the 69 municipalities have complied with the requirements and have their equitable share allocations reinstated, demonstrating the positive impact of the minister’s intervention,” said Treasury Director-General Duncan Pieterse.
Progress
Pieterse said all 69 municipalities responded to Godongwana’s letter dated 19 June 2026, in which he threatened to take further action unless his concerns were addressed.
Only four met the requirement to address unauthorised, irregular, fruitless and wasteful expenditure.
It is understood that teams from National Treasury and provincial treasuries are assisting the outstanding municipalities to conform.
Source: National Treasury presentation to parliament
Pieterse said 27 municipalities received their equitable share allocations on Thursday (16 July), with:
- 10 receiving the full amount (totalling R1.7 billion); and
- 17 receiving a partial amount (totalling R2.9 billion) strictly to pay creditors, including pension funds, Eskom and water boards.
More than 20 municipalities are expected to receive their funds in the coming week (starting 20 July), including the City of Johannesburg.
Source: National Treasury presentation to parliament
It is unclear at this stage how long it will take the outstanding municipalities to have their allocations released.
National Treasury previously said it didn’t expect the suspension to have a material impact on service delivery.
Its move to withhold the funds is aimed at getting the errant municipalities to:
- Rectify the adoption of unfunded budgets;
- Make commitments to pay creditors and bulk suppliers;
- Avoid irregular, fruitless and wasteful; and
- Ensure consequence management.
A push for compliance
While more than half of the sanctioned municipalities have had their funds partially or fully granted, parliament’s legal team has sought an opinion on National Treasury’s initial decision.
This is part of an exercise to establish whether Godongwana overreached his powers in withholding the funds.
“We will make our submission to the parliamentary legal team which is looking at this matter,” said Godongwana.
“But we think we are on the right track. Our view is that we are entitled to go up to 120 days [holding back these payments], for as long as parliament has not said to stop.”
Godongwana told MPs that a concerted effort is needed to turn municipalities around, with Treasury, Cogta and the South African Local Government Association (Salga) spearheading the work.
“We will do whatever it takes to work with parliament to deal with the issue of accountability, consequence management and support.”
But it can’t be a one-size-fits-all approach, he stressed.
This article was republished from Moneyweb. Read the original here.