North West threatens to cut December grants to municipalities that cannot show where the money went

Municipalities in North West that cannot show what happened to their unauthorised, irregular, fruitless and wasteful expenditure now face the possibility of losing their December 2026 equitable-share tranche, the funding that helps pay for basic services in communities.

The North West Provincial Treasury has intensified a coordinated intervention on that expenditure, known in municipal finance as UIFWE, working with the Department of Cooperative Governance and Traditional Affairs, the South African Local Government Association and the province’s municipalities. The engagements are meant to assess progress against historical UIFWE balances, identify outstanding compliance problems and put practical corrective measures in place.

Municipalities are expected to provide verifiable evidence of progress in addressing outstanding balances, to ensure that any write-offs of expenditure are lawful and properly supported, and to strengthen consequence management. They are also expected to show that their Municipal Public Accounts Committees and councils are doing effective oversight.

The pressure has a constitutional basis. Section 216(2) of the Constitution provides for the stopping of transfers to an organ of state in cases involving a serious or persistent material breach of measures established to ensure transparency and expenditure control, subject to applicable constitutional and legislative requirements. National Treasury has already been intervening on the withholding of municipal equitable-share transfers.

Linda Nengovhela, Chief Director for Municipal Financial Management at the Provincial Treasury, said the point was to stop the cycle rather than record it.

“Municipalities must move beyond reporting UIFW balances to implementing tangible systems that prevent irregularities, recover losses where applicable and hold those responsible accountable. The focus must be on measurable progress, supported by evidence and effective oversight,” she said.

She named the Greater Taung Local Municipality as an example of progress in addressing irregular expenditure, while acknowledging that further work remains necessary on fruitless and wasteful expenditure. She stressed that Section 32 of the Municipal Finance Management Act should be applied where applicable, so that instances of unauthorised, irregular, fruitless and wasteful expenditure are investigated and dealt with in accordance with the law.

Nengovhela also called on MPACs to scrutinise municipal financial management, examine outstanding UIFWE matters and support accountability through the appropriate council processes. The engagements highlighted the need for outgoing MPACs and other municipal structures to keep credible records and hand outstanding matters over properly to their successors, so that oversight does not restart from nothing after every change of committee.

The engagements are also aimed at helping municipalities close outstanding financial management weaknesses ahead of the December 2026 equitable-share tranche. Municipalities that fail to meet applicable financial management and compliance requirements may face further intervention, including the possible withholding of that tranche by National Treasury, subject to the relevant statutory processes.

Provincial Treasury said equitable-share allocations are an important source of funding for municipalities and support their ability to provide essential services to communities.

“Effective financial management is a timely corrective action and therefore critical not only for compliance and accountability, but also for protecting municipal service delivery,” the department said.

This report is drawn from the SAnews (South African Government News Agency) account of the Provincial Treasury’s position, published at https://www.sanews.gov.za/south-africa/north-west-steps-efforts-address-municipal-financial-irregularities. That account summarises the intervention and does not set out the size of any municipality’s UIFWE balance, which municipalities are at risk of losing the December tranche, or what the withheld amounts would be.