Why is Treasury withholding millions from municipalities?
CAPE TOWN — The South African Municipal Workers’ Union (SAMWU) has launched a stinging attack against National Treasury following a decision to withhold July 2026 equitable share allocations from dozens of municipalities. The union described the move as reckless and warned that the freeze will push struggling local governments toward total collapse.
While National Treasury maintains that the measure is a necessary tool to enforce fiscal discipline and compliance with the Municipal Finance Management Act (MFMA), SAMWU argues the practical consequences will be devastating. The union contends that without these financial resources, municipalities will be unable to provide essential services including water, sanitation, electricity, and refuse removal.
The dispute highlights a growing rift between organized labour and National Treasury over the management of local government finances. SAMWU officials stated that the decision amounts to collective punishment, as workers and poor communities bear the brunt of a crisis they did not create. The union pointed out that workers are not responsible for the irregular expenditure or unfunded budgets that Treasury is attempting to penalize.
According to SAMWU, the withholding of funds will lead to severe uncertainty regarding municipal workers’ salaries and the settlement of third-party deductions such as pension and medical aid contributions. The union further alleged that Treasury is ignoring constitutional mechanisms, such as Section 139 interventions, which are designed to support and restore governance in failing municipalities rather than starving them of resources.
The timing of the decision has also drawn sharp criticism. As the country moves through an election year, the union warned that crippling service delivery undermines the democratic process. SAMWU has called for an immediate reversal of the decision and is leading a National Day of Action to protest what it describes as a destructive austerity agenda.
The union is now demanding urgent engagement between National Treasury, the Department of Cooperative Governance and Traditional Affairs (CoGTA), and organized labour to find a sustainable solution. They argue that the future of local government must be built on investment and accountability rather than arbitrary budget cuts that jeopardize the livelihoods of the working class.
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