Treasury restores R3.6bn to Joburg after municipality meets conditions

National Treasury has reinstated the July equitable share allocation to the City of Johannesburg after the municipality met conditions set by the department, part of a wider reversal affecting 42 of 69 municipalities whose transfers had been frozen over governance concerns.

What Treasury said

Finance Minister Enoch Godongwana invoked Section 216 of the Constitution as a corrective measure to prompt municipalities to improve their financial management positions. He told parliament’s portfolio committee on cooperative governance and traditional affairs that Treasury has the legal right to withhold equitable share transfers without parliament’s approval.

Scope of reinstatements

Treasury director-general Duncan Pieterse confirmed that 42 of the 69 municipalities had complied with the requirements and had their July equitable share allocations reinstated. The list of those reinstated includes the City of Johannesburg and Nelson Mandela Bay.

Calls for oversight in Joburg

ActionSA president and Joburg mayoral candidate Herman Mashaba wrote to Godongwana urging that a technical support team monitor the National Treasury funds to be transferred to Joburg. In the letter, Mashaba raised questions about whether the city had provided a satisfactory recovery plan before the funds were released and asked about the mechanisms Treasury would use to ensure the money is used for its intended purposes.

“The letter also inquires whether the city has provided a satisfactory recovery plan before the funds are released and the mechanisms Treasury intends to employ to ensure the funds are used exclusively for their intended purposes,”

Mashaba highlighted the city’s immediate liquidity pressure, saying it was relying on the reinstatement of R3.6 billion in its equitable share allocation and had nine days of funds left in its coffers.

“This comes as the city battles a liquidity crisis, with nine days of funds left in its coffers and relying on the reinstatement of R3.6 billion in its equitable share allocation.”

He also criticised the city’s leadership, saying:

“Millions of residents are victims of a government that has eroded public trust in its ability to act in its interests.

ActionSA’s position is clear – mayor Dada Morero and the city’s leadership have failed to uphold basic governance and fiscal management competencies outlined in the Municipal Finance Management Act,”

Next steps and scrutiny

The Financial and Fiscal Commission had called for scrutiny of Treasury’s decision. The reinstatements follow a period in which transfers to municipalities were frozen to address governance shortcomings, and Treasury has begun restoring funds where conditions have been met.