Treasury lifts funding freeze on 42 municipalities

Enoch Godongwana

Johannesburg – National Treasury has reinstated the July equitable share allocations of 42 of the 69 municipalities whose funding was temporarily withheld earlier this month after they addressed governance and financial management concerns.

eNCA reported that the municipalities will now receive all or part of their July equitable share following interventions to resolve the issues that led to the suspension of their funding.

“Ten municipalities have received their full allocations, amounting to R1.7 billion.

“Another 17 municipalities have received R2.9 billion, but only to settle outstanding debts owed to creditors such as Eskom, water boards and pension funds,” the report said.

According to The Citizen, the allocations were initially withheld after Finance Minister Enoch Godongwana invoked Section 216 of the Constitution, describing the move as a corrective measure aimed at improving governance and financial management in municipalities.

Treasury Director-General Duncan Pieterse told Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs on Friday that 42 municipalities had complied with the required conditions and had their funding restored, the report said.

Among the municipalities to have their allocations reinstated are the City of Johannesburg and Nelson Mandela Bay.

However, 27 municipalities remain under sanction after failing to meet the necessary requirements.

The decision has sparked debate, with some Members of Parliament questioning Treasury’s approach, while the Financial and Fiscal Commission has called for the move to be scrutinised.

Meanwhile, ActionSA president and Johannesburg mayoral candidate Herman Mashaba has urged Treasury to closely monitor how the City of Johannesburg spends the reinstated funds.

In a letter to Godongwana, Mashaba called for a technical support team to oversee the allocation and questioned whether the city had submitted a satisfactory recovery plan before the release of the funds.

“The letter also enquires whether the City has provided a satisfactory recovery plan before the funds are released, and the mechanisms Treasury intends to employ to ensure that the funds are utilised exclusively for their intended purposes,” the party said in a statement.

Mashaba said Johannesburg was facing a liquidity crisis, with only days of available cash remaining, and warned that poor governance posed a risk to service delivery, infrastructure investment and investor confidence.

“ActionSA’s position is clear – Executive Mayor, Dada Morero, and the City’s leadership have failed to uphold basic governance and fiscal management competencies outlined in the Municipal Finance Management Act.”

The equitable share is an unconditional grant from the national government that enables municipalities to fund basic services and fulfil their constitutional responsibilities.

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