South Africa’s National Treasury has announced it will withhold funding from 69 municipalities across all 9 provinces, including the economic hub of Johannesburg, in a move aimed at enforcing fiscal discipline.

The decision, announced on Tuesday, affects more than a quarter of the country’s 257 municipalities and comes as authorities cite widespread financial mismanagement at local government level.

Treasury invoked section 216(2) of the Constitution read with section 38 of the Local Government: Municipal Finance Management Act to suspend the transfers.

Municipalities in South Africa fund themselves primarily through property rates and service charges, but also receive an equitable share of revenue from national coffers.

Despite being home to Africa’s richest square mile, Johannesburg has grappled with the same municipal failures seen across much of the country, from burst water pipes and potholes to mounting rubbish and decaying infrastructure.

Treasury said it would suspend July transfers to “instil fiscal discipline and ensure public money is properly managed.”

The statement cited specific financial management failures including unauthorised, irregular, fruitless and wasteful expenditure, failure to adopt funded budgets, late or non-payments to Eskom and water boards, overdue third-party deductions, and weak consequence management.

Treasury also pointed to failures to implement timely disciplinary actions, recoveries or criminal referrals against officials responsible for financial misconduct.

The funding cut adds to pressure on Johannesburg’s finances, with the city owing billions of rand to power and water utilities and struggling to maintain basic services, including road repairs.

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Johannesburg Mayor Dada Morero did not immediately respond to a request for comment.

In May, the finance minister threatened to withhold Johannesburg’s equitable share for July if the mayor failed to scrap a R10.3 billion ($634 million) wage offer the council made for city workers who wanted to strike last year.

Last year, President Cyril Ramaphosa lashed out at the state of the city of 6 million people, describing it as “not very pleasing”.

Alongside Johannesburg, funding will be withheld from municipalities including Emfuleni, where the country’s second-largest party, the Democratic Alliance, recently won a ward by-election from the African National Congress.

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Other affected municipalities include Nelson Mandela Bay and Buffalo City in the Eastern Cape, Mopani in Limpopo province and Mangaung in the Free State province.

Treasury said the move, which comes ahead of local elections in November, was not expected to affect service delivery.

Transfers will resume once affected municipalities meet the required conditions and provide proof that they have done so. One requirement is a minimum 25% reduction in unauthorised, irregular, fruitless and wasteful expenditure.

National and provincial treasuries said they would continue to engage with and support affected municipalities to ensure compliance.

The municipalities affected are:

Eastern Cape – Buffalo City, Nelson Mandela Bay, Makana, Sundays
River Valley, Inxuba Yethemba, Port St Johns; Free State – Mangaung, Letsemeng, Kopanong,
Mohokare, Xhariep District Municipality, Masilonyana, Tokologo, Matjhabeng, Nala, Dihlabeng,
Nketoana, Maluti-a-Phofung, Phumelela, Mantsopa, Ngwathe, Mafube; Gauteng – City of
Johannesburg, Emfuleni, Lesedi, Sedibeng District Municipality, Merafong City, Rand West City;
KwaZulu-Natal – iMpendle, uMzinyathi District Municipality, Newcastle, eMadlangeni, Amajuba
District Municipality, AbaQulusi, uMkhanyakude District Municipality; Limpopo – Mopani District
Municipality, Musina, Thabazimbi, Modimolle-Mookgopong, Fetakgomo Tubatse; Mpumalanga – Victor Khanye, Emakhazeni, Nkomazi; Northern Cape – Kamiesberg, Khâi-Ma, Ubuntu, Umsobomvu,
Emthanjeni, Renosterberg, Thembelihle, Siyathemba, !Kai !Garib, Magareng, Phokwane; North West –
Madibeng, Kgetlengrivier, Tswaing, Mafikeng, Ditsobotla, Ngaka Modiri Molema District Municipality,
Naledi, Mamusa, Dr Ruth Segomotsi, Mompati District Municipality, City of Matlosana, Maquassi Hills,
JB Marks; Western Cape – Theewaterskloof, Laingsburg, and Beaufort West.

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