CAPE TOWN — Parliament’s oversight body is intensifying its intervention after National Treasury temporarily froze R13.5 billion in crucial equitable share funding for 69 municipalities. Dr Zweli Mkhize, Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA), has stepped forward to address the financial showdown, emphasizing that while fiscal accountability is non-negotiable, the protection of vulnerable communities remains the ultimate priority.
The high-level intervention follows a critical meeting convened last Friday, which brought together the Minister of Finance, the Minister of Cooperative Governance and Traditional Affairs, the Financial and Fiscal Commission (FFC), the South African Local Government Association (Salga), and Members of the Executive Council (MECs) from all nine provinces.
According to Dr Mkhize, the primary objective of the gathering was to ensure strict accountability while guaranteeing that community service delivery is not compromised. Parliament sought detailed explanations from National Treasury regarding the decision to withhold equitable share allocations, acknowledging that decisive action was necessary after years of bad financial management, poor audit outcomes, and a lack of consequence management in local government.
“The situation of bad financial management and poor audit outcomes has been allowed to drag on for too long. We need at some point to draw a line to say the buck stops here,” Dr Mkhize stated. He highlighted that the intervention is already yielding results, noting that the number of affected municipalities had already begun to decline from an initial 99 as local governments started addressing Treasury’s compliance demands.
The committee acknowledged severe systemic issues prompting the freeze, including unfunded municipal budgets, failure to pay creditors within stipulated timeframes, and unpaid third-party obligations such as provident and pension funds. Additionally, municipalities have been flagged for unauthorized, irregular, and fruitless expenditure without adequate investigation or accountability.
However, the withholding of funds has sparked a robust debate regarding its constitutionality. Concerns have been raised by the FFC and other stakeholders about whether freezing the equitable share—an unconditional grant—violates the letter and spirit of Section 214 of the Constitution, as well as the annual Division of Revenue Act passed by Parliament.
In response to these legal complexities, Dr Mkhize confirmed that Parliament’s legal team has been tasked with reviewing the matter. The oversight body is working to separate the issues and determine the lawful instruments available to Treasury, ensuring that any withholding of funds strictly aligns with constitutional mandates and parliamentary authority.
Despite the legal and financial tensions, Dr Mkhize reiterated that Parliament received firm assurances from National Treasury and COGTA that vulnerable communities will be protected. A structured support plan is already in motion for municipalities struggling with poor revenue bases and non-viability.
To have the funding restrictions lifted, municipalities are being required to demonstrate immediate accountability. This includes mayors formally writing letters to confirm they will not support unfunded budgets, and committing to resolve at least 25% of unauthorized and irregular expenditure within the next two to three months.
“As far as we are concerned, they should be able to get all the municipalities assisted whilst we ensure that they have all complied with the minimum requirements for showing accountability,” Dr Mkhize concluded, reinforcing that the ultimate goal of the financial showdown is to ensure money reliably reaches the communities that depend on it for essential services.
