Finance Minister Enoch Godongwana defended the National Treasury's decision to temporarily withhold July 2024 equitable-share allocations from 69 municipalities [1].
The move signals a stricter approach to municipal financial discipline. By leveraging funding, the Treasury seeks to ensure local governments adhere to the Municipal Finance Management Act (MFMA) and meet their obligations to workers and creditors.
Godongwana said the Treasury withheld the money because the municipalities are failing to pay creditors, while skimping on workers' pension funds. He said that municipalities currently owe R1.7 billion in unpaid pension contributions [2].
The minister addressed critics of the decision, saying that the temporary withdrawal of July 2024 equitable-share allocations is not punitive; it is intended to compel compliance with the MFMA [1].
The 69 affected municipalities [1] were found non-compliant with the financial act. This lack of compliance includes the failure to settle debts with external creditors, and the neglect of mandatory pension payments for employees [2].
Godongwana said the action is a necessary step to protect the retirement savings of public servants and ensure the stability of the municipal financial system. The Treasury maintains that funds will be released once the municipalities demonstrate a commitment to meeting their legal, and financial obligations [1].
“"Municipalities owe R1.7 billion in unpaid pension contributions."”
This action represents a shift toward aggressive enforcement of the Municipal Finance Management Act. By withholding equitable-share allocations, the National Treasury is using its fiscal leverage to force local governments to prioritize labor liabilities and creditor payments over other expenditures, highlighting a systemic crisis in municipal financial governance.
