Finance Minister Enoch Godongwana warned in his 2026 Budget speech that poorly run municipalities face the prospect of having national funds reduced if they fail to “clean up their act,” signalling a shift by the national government from “oversight” to “active structural intervention” to stabilise local government finances.
Godongwana told Parliament the move is aimed at improving the financial health of municipalities, many of which have long struggled with rising debt, weak revenue collection, and uneven service delivery. He made clear that continued underperformance or mismanagement could prompt tighter fiscal measures, including reductions in transfers that many municipalities rely on to balance their books.
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The minister did not set out a detailed timetable or list of specific interventions in the Budget speech, but framed the change as part of a broader effort to restore fiscal discipline at local level and protect core services. “Oversight is not enough,” Godongwana said; national authorities must take a more hands-on role where municipal finances threaten service delivery or broader stability.
The announcement raises immediate questions for cash-strapped councils that depend on conditional and unconditional grants from national government. Budget cuts or the imposition of stricter conditions on grant funding could force councils to curb nonessential spending, accelerate meter-readings and billing reform, or seek emergency management before the national Treasury or relevant departments step in.
Legal mechanisms for national intervention in municipal affairs already exist in the Constitution and the Public Finance Management Act, allowing the national or provincial government to intervene where municipalities cannot or do not fulfil their obligations. Godongwana’s language suggests Treasury is preparing to use those tools more assertively to address persistent financial mismanagement.
Municipal associations and opposition parties have been raising alarm over deteriorating service delivery in recent years, pointing to electricity outages, water interruptions and stalled maintenance programs as signs of deeper fiscal distress. Municipal officials who improve revenue collection, reduce wasteful expenditure and strengthen governance, however, would be less likely to face punitive measures, according to the Treasury’s framing.
The Treasury is expected to publish further guidance on how it will assess municipal performance, the criteria for intervention, and the possible fiscal instruments it might deploy. For now, Godongwana’s warning is clear: the era of passive oversight is ending, and municipalities that do not address chronic financial weaknesses risk losing funding at a time when many local services are at stake.
By News-room
Axadle Times international–Monitoring.
