South Africa to Release R7.1 Billion to Non-Compliant Municipalities

South Africa's National Treasury will release R7.1 billion in withheld equitable share funding to 49 municipalities on Friday, July 31. Enoch Godongwana, the Minister of Finance, announced that the decision aims to prevent service delivery failures for poor households, despite the municipalities' continued non-compliance with the Municipal Finance Management Act.

The funds were part of a larger R13.5 billion July tranche withheld from 69 municipalities due to financial misconduct, irregular expenditure, and failure to pay providers such as Eskom and the South African Revenue Service. Of the 69 affected municipalities, 20 have received full funding and 21 have received partial funding, while 28 remain pending. The South African Municipal Workers’ Union previously condemned the freeze as "reckless and irrational," noting that it hindered the payment of staff salaries.

Godongwana clarified that the release is conditional and not based on a finding of compliance. Municipalities will receive letters detailing requirements they must meet before the next funding tranche. Treasury will implement a structured compliance program with reporting deadlines on September 30 and October 31, 2026; failure to show improvement may result in the withholding of December 2026 installments.

Minister of Cooperative Governance and Traditional Affairs Velenkosini Hlabisa announced that the government will apply a similar enforcement stance against national and provincial departments that owe billions to municipalities. Hlabisa urged that funds "must be used prudently" and called for citizens to register for the November 4 local government elections to ensure the election of competent councillors.