Failing councils will keep losing Treasury cash. What it means for you
Godongwana says Treasury will keep withholding equitable share money from municipalities that break finance rules, even under new councils. Here's what happened in July and what's at stake in December.
Finance Minister Enoch Godongwana says the new councils elected on 4 November won't get a softer ride from National Treasury. Municipalities that keep breaking money rules can still have their share of national funding held back, he said on Thursday (Business Day, The National).
He called the power to withhold transfers "a stick for them to perform" and said: "That's still going to continue" (The National).
What is Treasury threatening to hold back?
The local government equitable share. It is an unconditional grant from national government that helps municipalities pay for basic services, especially for poor households (SAnews).
It is paid in three tranches a year: July, December and March (Engineering News). Treasury can withhold it under section 216(2) of the Constitution, read with the Municipal Finance Management Act (Engineering News).
What happened when Treasury did this in July?
On 7 July 2026 Treasury held back the July tranche from 69 municipalities in all nine provinces (SAnews). The list included Johannesburg, Buffalo City, Nelson Mandela Bay and Mangaung (Business Day).
The reasons given were unfunded budgets, irregular and wasteful spending, and not paying creditors such as Eskom, water boards and SARS (The National).
| July 2026 withholding | Municipalities |
|---|---|
| Targeted by Treasury | 69 |
| Got their full share after complying | 20 |
| Got part of their share | 21 |
| Still non-compliant but paid anyway on 31 July | 28 |
Sources: Engineering News, The National
Money started flowing again from 31 July after repayment agreements worth more than R4 billion were signed (The National). Treasury released the balance, R7.1 billion according to Business Day, to stop residents from losing basic services. At the time Godongwana said it was a conditional release and that withholding could happen again in December if municipalities didn't comply (Engineering News).
Why does this matter more after the election?
More councils are now hung. The number has risen from 70 to more than 100, so more municipalities will be run by coalitions (The National).
Coalition partners have to agree on a budget, tenders and paying creditors. A budget that doesn't pass, or one adopted without the money to back it, is exactly the kind of failure that triggered July's cuts (The National).
Godongwana also pointed to infrastructure: of R1 trillion set aside by government, R205 billion is meant to be spent by municipalities. "If those municipalities are dysfunctional, that money is not going to be utilised effectively," he said (The National).
What else can get a council's money withheld?
Unpaid pensions. Godongwana told Parliament that municipalities owing pension funds R2 million or more are being checked, and those without a payment deal, or not sticking to one, could have their equitable share withheld or delayed (IOL). Municipalities owed pension funds about R2 billion as at 30 June 2026, based on Financial Sector Conduct Authority figures (IOL).
The pressure goes both ways. Treasury has warned national and provincial departments that it will take money from their own equitable share if they don't pay municipal accounts within 30 days (Engineering News, The National).
What does it mean for you?
Nothing changes on your municipal bill because of this announcement. But the next tranche is due in December, and a council that hasn't fixed its books risks losing it.
In July, Treasury chose to release the money rather than let services to residents collapse (Engineering News). There is no guarantee it will do the same again.
Cooperative Governance Minister Velenkosini Hlabisa has also asked residents and businesses to keep paying rates and service charges, saying municipalities can't deliver services without that revenue (SAnews).
To see how your council is doing, watch its first sitting, mayoral election and first budget decisions.
FAQ
What is the municipal equitable share?
An unconditional grant from national government, paid in July, December and March, that helps municipalities fund basic services, especially for poor households.
How many municipalities had funds withheld in July 2026?
69 municipalities across all nine provinces, including Johannesburg, Buffalo City, Nelson Mandela Bay and Mangaung. Treasury later released the money to protect basic services.
Can Treasury withhold money from newly elected councils?
Yes. Godongwana said on 12 November 2026 that withholding under section 216 of the Constitution will continue under the new councils.
Why can a municipality lose its equitable share?
Treasury has cited unfunded budgets, irregular and wasteful spending, and failing to pay Eskom, water boards, SARS and pension funds.