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The Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) today welcomed the intent behind National Treasury’s announcement to temporarily withhold the July 2026 equitable share transfers to 69 municipalities.

The committee noted that equitable share transfers are critical to supporting municipalities in delivering basic services to communities. It urged affected municipalities to urgently comply with the conditions set by Treasury so that funds can be released and not translate into further hardship for communities.
National Treasury, in a statement, said transfers will resume once affected municipalities meet the required conditions and submit proper proof of compliance. The purpose is to enforce compliance with legal prescriptions, including ensuring that budgets are funded, that action plans are in place to address unauthorised, irregular, fruitless and wasteful expenditure and that there are consequences for financial and governance irregularities.

Among the municipalities affected are both metropolitan municipalities in the Eastern Cape and local municipalities, including Makana and Sundays River Valley. In the Free State, Mangaung metro is affected along with several other municipalities in the province such as Masilonyana, Nala and Maluti-a-Phofung. Several other metros and local municipalities in other provinces are also affected. The committee had already engaged with many of the selected municipalities during joint oversight visits where these challenges were interrogated.

The committee noted that Treasury’s decision confirms the seriousness of the financial management and governance challenges highlighted during the joint oversight engagements. The Chairperson of the committee, Dr Zweli Mkhize, said the committee has consistently raised concerns about poor audit outcomes, persistent non-compliance and the failure of some municipalities to act despite guidance and support provided to them.

The Chairperson said that the joint oversight delegation was particularly concerned that, in many cases, there were few to no consequences for repeated failures. “All municipalities must realise that things cannot continue as usual when governance and financial prescripts are undermined,” he said.

Dr Mkhize emphasised that public representatives and municipal managers must be held accountable when financial management is compromised. “Municipal leaders must realise that negative audit outcomes, poor governance and financial irregularities are a reflection of overall capacity and integrity of municipal leadership. As such, the committee expects that municipalities will do everything in their power to build the institutional and financial capacity and eliminate unfunded budgets, disclaimers and adverse audit outcomes.

“For too long, the Auditor-General has had to release poor audit outcomes showing regression, repeat findings and complacency in dealing with material irregularities. All municipalities must aim for clean audits, and failure to act on audit findings must carry consequences,” Dr Mkhize said. “It is also imperative that councillors and municipal managers feel the consequences of bad administration because poor performance directly affects communities. Action must now be directed at leaders who mismanage positions of responsibility by allowing financial and procurement irregularities to continue.”

At the same time, the committee is encouraged by some improvements following Parliament’s joint oversight visits to struggling municipalities. “The impact is clear from the latest audit outcomes, with the most notable improvement being the reduction in disclaimed audit opinions. The audit outcomes for the 2024/25 financial year further showed the highest on-time submission rate to date, with 98% of municipalities submitting their financial statements on time. The AG has linked these improvements to the support and oversight provided by Parliament and by national and provincial governments,” Dr Mkhize said.

The Chairperson added that the committee will continue to support a collaborative joint oversight model involving Parliament, provincial legislatures, COGTA, National Treasury, provincial treasuries, the Auditor-General, SALGA and, where required, law-enforcement agencies. “The focus of our joint oversight is to support the calls of the Minister and the AG to eliminate unfunded budgets, disclaimers and adverse outcomes, and to build internal capacity to reduce municipalities’ overreliance on consultants,” he said.

Issued By: The Parliamentary Communication Services On Behalf Of The Chairperson Of The Portfolio Committee On Cooperative Governance And Traditional Affairs, Dr Zweli Mkhize.