Mayibongwe Maqhina|Published
Finance Minister Enoch Godongwana said yesterday the responsibility rested with all municipalities to demonstrate that public resources were being used effectively and in the service of the people.
Tabling the 2026 Medium Term Budget Policy Statement, Godongwana told the MPs that citizens experienced the state most directly at the local government level yet the financial and operational performance of many municipalities remained weak.
“This is untenable. It affects the delivery of basic services. It undermines economic activity and it erodes public confidence,” he said.
Godongwana also said the increase in funding went a long way to addressing fiscal pressures in municipalities.
Municipal grants may be withheld or reallocated
“The issue can no longer be only about resources. It must be about results," he said.
“The priority now is to improve financial management, strengthen administration and eliminate waste. Every rand transferred to municipalities must translate into visible improvements in people’s daily lives. Communities should have reliable water, functioning sanitation, well-maintained roads and safe, well-lit public spaces,” said the minister.
Godongwana also said municipalities were being incentivised to reinvest revenue from water, electricity and waste services into infrastructure supporting the services.
He charged that municipalities must better manage what they charge residents for basic services.
“Our review of municipal funding has found that most municipalities have enough money for day-to-day operations, but they spend too much on running costs. This leads to insufficient funding provisions for long-term infrastructure investment and maintenance.”
Godongwana stated that there are interventions in place to improve the revenue collection such as the use of smart meters.
“On top of the R2 billion allocated, we are adding R3 billion over the medium-term expenditure framework for an even wider rollout of smart meters. This is in response to the success we have seen in revenue collection in places like the Sol Plaatjie, Kannaland and Bela Bela local municipalities.”
Godongwana warned that he would not hesitate to withhold the Equitable Share allocations of municipalities that were in breach of their commitments.
In June, the National Treasury withheld allocations to 69 municipalities and released the funds meeting certain requirements.
“Over the medium term, grant conditions will be enforced, funds withheld or reallocated where municipalities do not comply, and allocations tied more closely to delivery,” he said.
Treasury proposes tougher municipal finance rules
Godongwana added that the government was intervening to ensure that national departments, provinces and other agencies pay money owed to municipalities subject to verification of amounts.
“As at December 31, 2025, municipalities reported that public bodies owed local government R27.6 billion, of which more than half was owed by provincial departments.”
Meanwhile, National Treasury is in the process of amending the Municipal Public Finance Management Act (MFMA).
Godongwana told Parliament that the draft legislation that has been published for comment clarifies the responsibilities of accounting officers, boards and executive authorities.
“It strengthens National Treasury’s ability to act against financial misconduct and persistent noncompliance and protects accounting officers who make lawful decisions in good faith. It also strengthens the governance of financially distressed public entities.”
The bill requires municipalities to demonstrate that their budgets are genuinely funded and introduces mechanisms to investigate financial misconduct and recover losses, among other things.
Draft bill targets unfunded budgets and misconduct
“The proposed changes allow for robust early interventions under section 139 of the Constitution, strengthen oversight of financial management by the National Treasury, and provide for officials, political office bearers and board directors to be made personally liable for unauthorised, irregular, fruitless and wasteful expenditure.
“They deter councils from adopting unfunded budgets and establish provisions for more credible budget estimates.”
Director-General Duncan Pieterse said central to the amendments was for National Treasury to play a role in the appointment of CFOs in municipalities.
He also said the amendment bill was up for comment.