South Africa's National Treasury has temporarily withheld July equitable-share funds from 69 municipalities due to persistent financial non-compliance [1].
The move signals a crackdown on systemic fiscal mismanagement across local governments. By freezing these funds, the Treasury aims to force municipalities to adhere to the Municipal Finance Management Act and settle outstanding debts to employees and the state.
Treasury officials said the decision during a briefing in Pretoria. The funding freeze affects 69 municipalities [1], including the Buffalo City Metro in the Eastern Cape. The total amount of withheld July equitable-share funds is R13.5 billion [2].
Officials said the suspension is a response to serious failures in fiscal discipline. The flagged municipalities failed to address unauthorized expenditures and neglected to remit essential payments. Specifically, the Treasury found that 16 municipalities across the country pocketed workers' pension, Unemployment Insurance Fund (UIF), and PAYE deductions [2].
The Municipal Finance Management Act requires local governments to maintain strict accounting standards and ensure all statutory deductions are paid. The Treasury said the funds will remain withheld until the affected municipalities demonstrate compliance and rectify their financial records.
Buffalo City Metro is among the most prominent administrations facing these sanctions. The Treasury said the pattern of non-compliance is persistent and requires immediate intervention to protect public funds and worker benefits [1].
Local governments must now provide proof of payment for the misappropriated pension and tax funds to regain access to their July allocations [2].
“The total amount of withheld July equitable-share funds is R13.5 billion.”
This action reflects a shift toward stricter enforcement of fiscal accountability in South Africa's local government sector. By targeting equitable-share funds—which are critical for basic service delivery—the National Treasury is using financial leverage to compel municipalities to prioritize statutory obligations, particularly worker pensions and tax remittances, over other expenditures.
