Godongwana withholds July funds to Jhb, over 70 other municipalities

The City of Johannesburg (CoJ) has failed to avert another cash crunch after National Treasury confirmed on Tuesday morning that it will withhold a portion of the July equitable share allocation to South Africa’s biggest metro, and more than 70 other municipalities across the country.

This is despite confidence by CoJ Mayor Dada Morero and other executives that they would get budget plans over the line that would prevent Finance Minister Enoch Godongwana from invoking Section 216 of the Constitution.

Read: Clock is ticking as Godongwana gives CoJ new notice over funding cuts

National Treasury said on Tuesday it was in the process of temporarily withholding the July 2026 equitable share transfers to selected municipalities in what it said is a bid to:

• Instil fiscal discipline and ensure that public money is properly managed;
• Ensure that unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) is addressed; and that
• Municipal officials and office-bearers are held accountable where required by law.

Other major metro cities that have seen a temporary withholding of equitable share funding include Nelson Mandela Bay and Buffalo City in the Eastern Cape, and Mangaung in the Free State.

The decision follows persistent serious non-compliance with the Municipal Finance Management Act (MFMA) and its supporting regulations, despite support provided by the National Treasury through guidance, engagement, and formal or informal communication.

Treasury’s move comes just days after Moody’s Ratings surprise move to up CoJ ratings outlook in-line with SA’s national credit rating over the weekend.

Moneyweb previously reported on Godongwana’s warnings to Joburg Mayor Morero, including a letter where the head of fiscal policy censured city officials over the municipality’s fragile finances and poor governance.

On 19 June 2026, Godongwana gave Joburg seven days to table reasons why funds should not be withheld.

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While a plan was tabled at the Johannesburg City Council, insiders were unable to confirm to Moneyweb if a reply to Godongwana was made in time.

Joburg’s financial crisis has long been documented, including concerns over Morero’s defiance to withdraw an expensive R10 billion wage deal with the South African Municipal Workers’ Union (Samwu).

Despite an unfunded budget, which will see expenditure surpass foreseeable revenue, Morero and other city officials don’t believe there’s a crisis.

Joburg and others

The latest decision by National Treasury again puts the CoJ among more than 70 municipalities that will not receive the full July allocation. This makes up almost 30% of the country’s total 257 municipalities.

In Gauteng, the Treasury’s ‘withholding list’ also includes Emfuleni, Lesedi, Sedibeng District Municipality, Merafong City, and Rand West City.

The full national list is below:

Source: National Treasury

“The municipalities have been given sufficient notice in writing and urged to take measures to change their financial management positions ahead of the withholding of funds. They were also given a platform to send, in writing, reasons why their funds should not be withheld,” National Treasury said in a 3-page statement.

“It is important to note that this is a corrective rather than punitive measure. Because the withholding of the funds will be for a short-term period, the National Treasury does not foresee any impact on service delivery.”

It added that non-compliance with the legislation is not only a dereliction of fiduciary duties by the political and administrative leadership of municipalities, but it is also threatening the financial sustainability of bulk suppliers (water boards and Eskom).

Listen/read:

“In addition, failure to pay third parties negatively impacts on the ability of statutory bodies to continue operating optimally,” it said.

Treasury has again sounded the alarm on the latest Auditor General’s 2024/25 report on local government audit outcomes, which includes concerns that since 2021, municipalities have incurred a total of R24.1 billion in fruitless and wasteful expenditure; that budget credibility continued to deteriorate and that by the 2024/25 year-end, municipalities owed interest of R3.4 billion to Eskom and R1.2 billion to water boards.

“Transfers will resume once the affected municipalities meet the required conditions and submit proper proof of the conditions being met,” Treasury said.