Portfolio Committee on Cogta chairperson Zweli Mkhize backed National Treasury’s decision to withhold equitable share payments from non-compliant municipalities,saying “the buck stops here”.
Phando Jikelo/RSA Parliament
Treasury’s decision to withhold payments to 69 municipalities may disrupt services,Cogta says.Treasury aims to enforce compliance and address financial mismanagement in municipalities,with over half in financial distress.It urged municipalities to prioritise support for indigent households,improve revenue collection,and implement recovery plans to mitigate the impact on service delivery.National Treasury’s decision to withhold national equitable share payments to 69 municipalities may significantly affect service delivery in these municipalities,with indigent households most vulnerable,the Department of Cooperative Governance and Traditional Affairs (Cogta) has warned.
On Friday,the Portfolio Committee on Cogta,the Standing Committees on Finance,on Appropriations,and on Public Accounts held a joint meeting with National Treasury,Cogta,the South African Local Government Association (SALGA),and provincial Cogta MECs.
The intended purpose of the meeting was to examine National Treasury’s rationale.
In their presentation,National Treasury said the 2026 Budget Review signalled a fundamental shift in the government’s approach to local and provincial government. It is moving from passive oversight to active structural intervention aimed at a sustainable turnaround in municipal financial management and service delivery.
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For over a decade,intergovernmental transfers have masked underlying rising financial weaknesses. More than half of the country’s 257 municipalities are now in financial distress,with high levels of unauthorised,irregular,fruitless and wasteful expenditure,and rising non-payment to third parties,including SARS,municipal pension funds,water boards,and Eskom.
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In December 2025,National Treasury launched an extensive consultation process with municipalities found to be in breach of their obligations under the Municipal Finance Management Act. The presentation stated that affected municipalities were given formal notice that their equitable share allocations could be withheld if they failed to take corrective action.
Dr Kevin Naidoo,Cogta’s deputy director-general for policy,governance and administration,said withholding the equitable share may create cashflow shortages affecting operations,contracts,procurement and infrastructure maintenance.
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“It may also aggravate,we believe,debt accumulation and weaken municipalities’ ability to respond to audit findings,” he added.
“Our key message here is that withholding must be understood as corrective,and must be based on sufficient,reliable and independently verifiable data to minimise unintended harm to governance and service delivery.”
Naidoo added:
The impact on municipal services could be significant,we believe. Water,sanitation,refuse removal,roads,and community facilities may all be affected when these municipalities face these shortfalls.
“We believe,too,that indigent households are especially vulnerable because the equitable share supports free basic services. And for that reason,municipalities must prioritise indigent support,improve revenue management and strengthen accountability while Section 126 is implemented,with,once again,due regard to vulnerable communities.”
Naidoo said withholding the share of municipalities already in financial distress may intensify the pressure on their Eskom and water board obligations. This would increase the risk of penalties,interest charges,legal action and potential disruption to bulk service supply.
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Furthermore,delayed payments to suppliers weaken local economies and threaten small and medium enterprises dependent on municipal contracts.
Naidoo said Cogta recommended that affected municipalities implement credible financial recovery plans,strengthen expenditure controls,develop realistic creditor payment plans,and maintain essential services,particularly indigent support programmes.
“Enforcement must restore compliance while safeguarding essential services and protecting vulnerable communities,” he added.
Chairperson of the Portfolio Committee on Cogta,ANC MP Zweli Mkhize,opened the meeting with a monologue that lasted the best part of half an hour,in which he said the committee supported Treasury’s move.
“It’s about time we draw a line; we’re saying the buck stops here. Parliament will no longer allow a culture of impunity,” he said.
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Mkhize added:
What is being asked for is nothing unusual,other than the standard financial procedures. We would like the municipalities to take responsibility for their lack of compliance on this matter and correct the situation. And in so correcting,we would like a deadline by which all these matters are resolved.
EFF MP Omphile Maotwe complained about Mkhize’s soliloquy,saying it was not on the agenda.
“You even made the wrong conclusion that we are supporting what National Treasury has done,” Maotwe said.
ANC MP Cameron Dugmore said to Mkhize: “Honourable Maotwe is not chairing the meeting,you are,and please continue.”
MKP MP David Skosana expressed his discomfort with Dugmore’s intervention.
“You know,chair,you can speak for yourself. You don’t need support from Dugmore. What I wanted to say,is that we are not in support of the National Treasury. That must be clear. Thank you,chair.”
1/ The joint meeting of @ParliamentofRSA's oversight committees on #COGTA,#SCOPA,#Finance and #Appropriations hears from @Treasury_RSA that all 69 #municipalities have since responded to the Minister of Finance's letter dated 19 June 2026. Only 4 conformed to the UIFWe… pic.twitter.com/ZcljGTvbB5
— Governance-Cluster (@GovernanceClus1) July 17,2026
Unperturbed,Mkhize handed over to the Standing Committee on Finance chairperson,ANC MP Joe Maswanganyi,who said his committee realised the gravity of the financial and governance failures that have led to this intervention.
“The stopping of transfers may create pressure for compliance,but it is not by itself a municipal recovery strategy. It cannot replace the constitutional responsibility of national and provincial governance to support and strengthen the capacity of municipalities to manage their own affairs,” he added.
“Each affected municipality should know what it must do,what assistance it will receive,which sphere of government is responsible for providing and by when the required corrective action must be completed,” said Maswanganyi,of state capture fame.
“We should also guard against a situation where the residents of affected municipalities bear the consequences of failures committed by municipalities.”
He noted that the local government equitable share played an important role in funding basic services,especially for poor households.
The meeting continued into Friday afternoon.
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