Impendle Municipality, which is one of the poorest municipalities in KwaZulu-Natal, is worried by the National Treasury withholding equitable share grants from poor-performing municipalities Image: x.com
Impendle Municipality, which is one of the smallest rural municipalities in KwaZulu-Natal Midlands, was on Thursday holding its breath, hoping discussions would persuade the National Treasurer to withdraw its decision to withhold equitable share grants from poor-performing municipalities.
The National Treasury revealed on Tuesday that it was temporarily withholding the July 2026 equitable share transfers to certain municipalities to instil fiscal discipline.
Treasury said this is to ensure that public money allocated to the municipalities is properly managed and these municipalities learn to address unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE).
Equitable shares are funds that the National Treasurer unconditionally transfers to provincial and local governments for administrative costs.
The financial status in Impendle, which is among municipalities identified by the National Treasury as financially ill-disciplined, reached a boiling point when it failed to pay staff salaries on time early this year.
Mayor Kho Dlamini stated that the municipality would not survive without equitable shares.
“This is affecting us badly, but there are currently discussions with the National Treasury, which we believe will lead to a certain agreement by 2 pm,” said Dlamini.
He said the grant was important to Impendle, which had scarce rate collection sources.
“Impendle Municipality is mainly grant-dependent,” said Dlamini.
In the statement, the Treasury stated that its decision was meant to hold municipal officials and office-bearers accountable.
“The decision follows persistent and 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,” read the statement.
Other municipalities in KwaZulu-Natal, which are affected by the Treasury’s decision, are uMzinyathi, Amajuba, and uMkhanyakude districts, Newcastle, eMadlangeni, and AbaQulusi.
UMkhanyakude Mayor Siphile Mdaka said his municipality was included in the list through miscommunication between it and the Treasury.
“It is a matter that Treasury and us are dealing with (on Friday) in our meeting at 4 pm,” he said.
Mdaka said the municipality had provided reports to the Treasury that there is work in progress in terms of the issues that the municipality is addressing internally.
“But all issues that they (Treasury) have raised have been resolved.
“This is just a communication issue, which is why I am saying we are clarifying this with them tomorrow at 4 pm,” he said.
The Congress of South African Trade Unions (Cosatu) has called for urgent interventions for financially distressed municipalities, as the Treasury’s decision may worsen their situation.
The federation said, although it appreciates the need to install financial discipline in municipalities when it comes to their workers’ salaries and pension funds, Eskom, Water Boards, and other service providers, there would be unintended consequences for withholding the grant.
“Some of these municipalities are so financially cash-strapped that this action may cause some basic services to grind to a halt and leave many municipal workers unpaid once again,” said Cosatu’s parliamentary coordinator Matthew Parks.
Parks called for engagements between Treasury, the Department of Cooperative Governance and Traditional Affairs (COGTA), and the South African Local Government Association (SALGA) “to put in place interventions to resolve these ever-worsening crises”.
Parks said the solution to mishandling municipality finances would be to appoint competent management and deal with corruption and wasteful expenditure through the intervention of the Hawks and the Special Investigating Unit.
“It is key that these interventions do not lead to a further collapse of municipal services or see more workers sent home unpaid,” said Parks.
bongani.hans@inl.co.za