National Treasury has withheld its July 2026 cheques from 65 municipalities, including Johannesburg, for persistent financial mismanagement and unpaid bills to Eskom, water boards and suppliers. It’s part of a broader crackdown touching 69 municipalities in total. To get the money flowing again, councils must prove they’re cutting wasteful and irregular spending, holding officials accountable, and settling debts with creditors. Mayors who passed unfunded budgets must personally commit, in writing, to stop. The move lands the same week Herman Mashaba described Johannesburg’s bins going uncollected because contractors haven’t been paid — a vivid, local symptom of the national problem Treasury is trying to fix.
By Alec Hogg
In the early days of BizNews, we had a supplier who simply wouldn’t pay. Not couldn’t — wouldn’t. Every invoice met a new excuse, a new promise, a new “next month.”
I eventually stopped extending credit and made them pay upfront for everything, cash before service. It wasn’t punishment. It was the only language that got results, because they’d shown me, through years of behaviour, exactly what their promises were worth.
Charlie Munger had a phrase for this that I’ve never forgotten: “Show me the incentive, and I’ll show you the outcome.” You don’t fix broken behaviour by hoping it improves. You fix it by changing what happens when it doesn’t.
National Treasury appears to have finally arrived at the same conclusion about 69 of South Africa’s municipalities, around a quarter of the total. This morning Treasury announced it is temporarily withholding the July 2026 equitable share transfer — constitutionally mandated funding which keeps municipalities running — from 65 municipalities across every province.
Buffalo City and Nelson Mandela Bay in the Eastern Cape. Mangaung and more than a dozen Free State municipalities. Emfuleni and Merafong in Gauteng. My boyhood town of Newcastle, and plenty more, in KwaZulu-Natal. And Johannesburg — the country’s economic capital, a G20 host city, now formally named by its own national government as a municipality failing to manage public money properly.
Treasury was careful with its language, calling this “corrective rather than punitive,” and pointing out the affected councils had months of warnings, guidance circulars and one-on-one engagements before the money stopped flowing. But read past the diplomatic phrasing and the numbers tell a starker story.
Since the 2021/22 financial year, municipalities have racked up R24.12 billion in fruitless and wasteful expenditure, R145.21 billion in irregular expenditure — R40.14 billion of that in the 2024/25 year alone — and R118.13 billion in unauthorised expenditure. Perhaps most damning: 116 municipalities, 45% of those we have in SA, adopted unfunded budgets in 2024/25, up from 113 the year before. That’s not a shrinking problem. It’s compounding, and not in the way any of us want compounding to work.
This is where former and prospective next Mayor of Johannesburg, ActionSA founder Herman Mashaba’s account in an interview with our Chris Steyn yesterday stops being politics and starts reading like documentary evidence. He described Johannesburg’s Pikitup service failing to collect refuse on Friday because contractors haven’t been paid — a direct, visible symptom of exactly the kind of unfunded budgeting that Treasury’s report condemns nationally.
Mashaba recounted a meeting with ANC Mayor Dada Morero who told him, apparently without irony, that he’d appointed Margaret Arnolds as MMC of Finance not for competence but “because I want to control her.” Put that alongside Treasury’s finding that Municipal Public Accounts Committees across the country aren’t functioning, that irregular expenditure isn’t being investigated, that consequence management is largely theatre — and Johannesburg stops looking like an isolated embarrassment. It looks like the median case for broken local government in much of South Africa.
What makes today’s action by Treasury genuinely significant is the mechanism attached to it. This isn’t a stern letter. To get the money they cannot survive without, municipalities on the list must hit a minimum 25% reduction in their irregular, unauthorised and wasteful expenditure balances by the end of September. Having any unauthorised expenditure at all is still crazy in any rational world. But at least it’s a start.
And it’s not simply the council’s say-so. Treasury needs the 25% cut in plundering (call it what it is…) to be backed by a verified UIFWE register and actual Municipal Public Accounts Committee resolutions — not just promises.
Municipalities must show that a disciplinary board is functioning and actually referring misconduct cases, not merely existing on an organogram. They must sign real payment agreements with Eskom, the water boards, SARS and pension funds before Treasury releases money matched to actual invoices.
And any mayor who lets their council adopt an unfunded budget must now write personally to the Finance Minister, committing in writing never to do it again.
That last requirement is the one worth sitting with. Buffett spent sixty years telling Berkshire shareholders that a signature means something — that when a manager puts their name to a commitment, it should carry weight precisely because reputations, not just balance sheets, are on the line. Treasury is effectively demanding the same discipline from mayors: not a budget speech, not a press release, but a personal, written, on-record promise, with the taps switched off until it’s honoured.
Interesting timing: on the very day Treasury pulled the trigger, SA’s Finance Minister Enoch Godongwana today told a GTAC economics conference that “capable institutions require credible public finances, good data, accountability and discipline.” Fine words. What happens next at the 69 municipalities on his own department’s list are the test of whether he means what he’s said.
Mashaba’s own account suggests part of the dysfunction runs deeper than any single circular can reach — appointments made for control (of the purse) rather than competence, committees that don’t meet, a mayoral chain nobody in Joburg’s current administration can even locate.
You cannot audit your way out of a culture where the point of holding office is proximity to money rather than stewardship of it. Munger’s urging to ‘invert, always invert’ to find the solution cuts both ways here: if you wanted to guarantee unfunded budgets and unrecovered fraud, you’d design exactly the incentive structure much of local government has been running under — soft consequences, political appointments in finance seats, and transfers that arrive regardless of performance.
That last piece is what’s now changed. At last. That is if Treasury gets the political cover to stick to its guns.
For the first time in a long while, transfers from the central coffer to the cadre deployed looters (again, call it what it is…) are not guaranteed. Whether Johannesburg, NMB, Mangaung and the rest treat this as the wake-up call it’s meant to be, or simply wait it out until the money is switched back on regardless, will tell us a great deal about whether South African local government is capable of reform from the inside. Or whether it only ever responds, like my old supplier, to credit withdrawals.
*Alec Hogg is the editor of BizNews
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