Why Treasury’s Hold‑Back on Funds Matters for South African Municipalities

What Happened?

The National Treasury decided to keep back R13.5 billion in equitable‑share transfers from 69 municipalities that missed financial‑management rules. Dr Zweli Mkhize, chair of the Portfolio Committee on Cooperative Governance and Traditional Affairs, says this move isn’t a one‑off punishment – it’s part of a larger pattern of problems that oversight bodies have been flagging for years.

How the Decision Fits Into Bigger Oversight Work

Joint Monitoring by Parliament and Other Agencies

Mkhize explained that the Treasury’s action lines up with findings from:

• The Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA)
• The Standing Committee on Public Accounts
• The Standing Committee on the Auditor‑General (SCoAG)
• Provincial treasuries and the Auditor‑General’s office

These groups have repeatedly pointed out the same weaknesses in municipal finances and governance.

Common Problems Identified

The issues keep showing up:

• Unfunded budgets – spending more than what’s available
• Weak internal controls – loopholes that allow mistakes or fraud
• Procurement irregularities – shady tender processes
• Poor revenue collection – not collecting enough rates and service fees
• High water and electricity losses – leaks and theft
• Irregular expenditure – money spent without proper approval
• Little or no sanction for proven wrongdoing

Audit Results Show Progress – But Challenges Remain

Improvements Since 2020/21

The Auditor‑General’s 2024/25 report reveals some bright spots:

• Disclaimed audit opinions dropped from 29 (2020/21) to just 8.
• 98 % of municipalities submitted their annual financial statements on time.
• 72 municipalities improved their audit outcomes compared with 2020/21.

Where We Still Fall Short

Despite the gains, the picture is still concerning:

• Only 39 municipalities earned a clean audit.
• 145 municipalities (57 % of all) stayed at the same audit level as in 2020/21.
• 38 municipalities actually got worse, including some that handle large slices of the local‑government budget.
• None of the eight metros achieved a clean audit; the number of metros with qualified opinions rose from two to five.

What This Means for Everyday Citizens

Service Delivery Takes a Hit

When metros and financial mismanagement spreads, residents feel it directly:

• Potholed roads and slow repairs
• Trash piling up because refuse collection falters
• Water cuts and electricity outages
• Delayed or stalled infrastructure projects

Who’s Responsible?

Mkhize stresses that fixing these problems isn’t just the job of municipal finance staff. Everyone in the accountability chain must step up:

• Provincial governments – constitutionally obliged to support struggling municipalities
• National and provincial treasuries – oversee money flows
• Municipal councils, mayors, and managers – set the tone and enforce rules
• Public accounts and audit committees – watch over spending
• Disciplinary boards – apply consequences when rules are broken

Leadership Must Own the Outcomes

According to Dr Mkhize, audit results reflect the quality of political leadership, not just technical slip‑ups. Leaders at every level – from ward councillors to provincial premiers – need to acknowledge that poor audit scores are a mirror of their own governance.

Looking Ahead

The committee will keep watching whether the 69 affected municipalities meet Treasury’s conditions – such as submitting credible action plans, fixing unauthorized spending, and installing consequences for misconduct. Only when those steps are taken will the funds be released, helping to protect communities from further hardship.

Bottom Line for Teens

Money mismanagement in town halls isn’t just a boring bureaucratic issue – it shows up as broken streets, dirty neighborhoods, and unreliable utilities. Everyone, from the president to the local mayor, has a role to play in making sure public funds are used properly so that services work for all of us.