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Cooperative Governance and Traditional Affairs (COGTA) Minister Velenkosini Hlabisa has warned municipalities to stop adopting unfunded budgets, saying the practice undermines financial sustainability and misleads communities.

Addressing a joint media briefing in Pretoria on Tuesday with Finance Minister Enoch Godongwana on the temporary withholding of municipal equitable share transfers, Hlabisa said municipalities should only budget for expenditure that can be financed through available revenue.

“Unfunded budgets must come to an end,” Hlabisa said.

He said municipalities must take responsibility for ensuring sound financial management, particularly as the current term of local government draws to a close ahead of the Municipal Elections scheduled for November 2026.

He warned that municipalities should not leave newly elected councils with severe financial challenges before they receive their next equitable share allocation.

The Minister said unfunded budgets are among the root causes of municipal financial distress, often resulting in municipalities failing to meet their obligations to employees, creditors and key service providers.

“When money has been given to a municipality, the municipality must pay water boards, SARS [South African Revenue Service], Eskom and everybody that a municipality owes, so that they do not experience a similar situation.

“Government departments and provincial governments must also pay municipalities. The whole value chain must function so that we do not experience this again,” Hlabisa said.

The Minister said government will work closely with the South African Local Government Association (SALGA), organised labour, and other stakeholders to identify municipalities facing financial difficulties and intervene before more severe measures become necessary.

He said the emphasis will be on improving compliance and providing support to municipalities before financial problems escalate.

Improvements in municipal financial reporting

Hlabisa welcomed improvements in municipal financial reporting, noting that only one municipality failed to submit its annual financial statements last year, after the sector consistently achieved a 98% submission rate.

He said government aims to achieve full compliance by the 31 August 2026 deadline.

“We do not want even one municipality to fail to submit annual financial statements. The point is compliance,” he said.

Drawing a comparison with household finances, Hlabisa said municipalities should budget within their means.

“If you earn R10 000, you budget according to the salary you receive. Where things go wrong in some municipalities, is that they budget on money they do not have.”

He added that while some municipalities prioritise paying salaries, they often neglect statutory obligations such as payments to SARS, Eskom and water boards, creating deeper financial problems.

Hlabisa also called on residents, businesses, and government institutions to pay municipal rates and service charges, saying municipalities cannot deliver services without sufficient revenue.

“You cannot expect municipalities to render services if we do not pay. Municipalities will only be functional if ratepayers, businesses, and government entities pay what is due to municipalities,” Hlabisa said.

He acknowledged that municipal dysfunction stems from several interconnected challenges, but expressed confidence that stronger cooperation, improved compliance and shared accountability will help restore municipalities to financial stability and improve service delivery.

Municipal equitable share

The Municipal Equitable Share is an unconditional allocation made to municipalities in terms of the Constitution and the annual Division of Revenue Act.

It is intended to support municipalities in performing their constitutional functions and to assist them in providing basic services to communities, particularly poor and vulnerable households.

On 7 July 2026, National Treasury announced the temporary withholding of the July 2026 Municipal Equitable Share transfers to 69 municipalities across all nine provinces. The decision followed persistent and serious non-compliance with the Municipal Finance Management Act (MFMA) and related regulations, despite previous support, guidance and engagements provided to municipalities. – SAnews.gov.za

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Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa has urged South Africans to register to vote during the second and final national voter registration weekend on 1-2 August, 2026.

Hlabisa’s call comes as South Africa prepares for the next Local Government Elections, with the voter registration weekend providing eligible citizens an opportunity to register or update their registration details before the polls.

Speaking during a joint media briefing with Finance Minister Enoch Godongwana on the temporary withholding of municipal equitable share transfers, Hlabisa said active citizen participation is essential to improve the performance of municipalities.

The Minister encouraged eligible citizens to use the voter registration weekend on 1-2 August, to register ahead of the upcoming Local Government Elections.

“I would like to urge the people of South Africa to go and register. The coming weekend, 1 and 2 August, is an open weekend for registration. Go and register as a voter,” Hlabisa said.

Hlabisa also encouraged citizens to participate in the nomination of candidates, and to vote for leaders capable of serving their communities.

“Go and vote for people who will serve you. It is not going to help to complain if you don’t participate in selecting who should be your candidate.”

Hlabisa emphasised that the quality of local governance depends on the calibre of councillors elected to office, saying: “If we want to fix municipalities, we must fix who becomes a councillor. That is the bottom line.”

He added that elected leaders must ensure that public funds are spent on essential services and priority needs, rather than non-essential projects.

“When the money comes, it must do what it is supposed to do and not be spent on the nice-to-haves – eventually leading municipalities into a critical state,” Hlabisa said. – SAnews.gov.za

 

 

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In line with efforts to boost regional trade and financial integration, the Angolan kwanza has joined the Southern African Development Community real-time gross settlement (SADC-RTGS) system as a settlement currency.

This development was announced on Monday by South African Reserve Bank (SARB) Governor Lesetja Kganyago and Governor of the Banco Nacional de Angola Manuel Tiago Dias. 

“The kwanza’s inclusion supports regional payments modernisation efforts and aligns with the Group of Twenty’s (G20) cross-border payment goals of reducing costs, increasing speed and improving efficiency in cross-border transactions,” SARB said in a statement.

The Angolan kwanza is the second settlement currency to be introduced in the SADC-RTGS system, which has settled transactions exclusively in South African rand since its inception in 2013. 

The system has processed R250.7 billion worth of transactions per month since its introduction.  

 It is operated by the South African Reserve Bank, as appointed by the SADC Committee of Central Banks Governors.

There are currently 15 countries participating in the SADC-RTGS system.

“By enabling direct settlement in kwanza, participants transacting in the currency can reduce foreign exchange conversion requirements, helping to lower transaction costs for participants and their customers. 

“A more diverse set of settlement currencies in the system makes it easier for businesses and customers to transact across SADC countries in local currencies. 

“Faster settlement can also help businesses manage cash flow more efficiently and access funds more quickly when trading across the region,” SARB said.

The Reserve Bank said the intention is to onboard additional regional currencies, such as the Botswana pula, in due course. 

“By joining the SADC-RTGS system, a country can enable its currency to play a greater role in regional trade and finance, reduce reliance on foreign currencies and intermediaries, lower the cost of doing business across borders and strengthen its position within the evolving Southern African and African financial landscape,” SARB said.

The enablement of a multi-currency capability in the SADC-RTGS system is one of the strategic initiatives to strengthen regional financial integration, promote greater use of local and regional currencies in cross-border trade and reduce reliance on non-SADC currencies. –SAnews.gov.za

 

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National Treasury will release the remaining July 2026 equitable share allocation previously withheld from municipalities with a view of protecting communities from the “consequences of failures” by municipalities.

This according to Finance Minister Enoch Godongwana who, together with Cooperative Governance and Traditional Affairs Minister Velenkosini Hlabisa, briefed the media on Tuesday.

“The decision follows the comprehensive assessment process undertaken, including the active monitoring of compliance by the affected municipalities after National Treasury temporarily withheld transfers in terms of section 216(2) of the Constitution, read with the applicable provisions of the Municipal Finance Management Act, 2003 (MFMA).

“I wish to make it clear that the decision to release the remaining transfers does not mean that the affected municipalities have satisfied the requirements of the MFMA, the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, or the requirements previously communicated in my letters addressed to the respective mayors and the press statement released by the department earlier this month,” he said.

Godongwana explained that National Treasury is releasing the funds to protect service delivery.

“National Treasury has decided to release funding… because we have withheld it for close to 30 days which ends on Monday, 3 August, and to avoid having an adverse short- to medium-term effect on the delivery of basic municipal services.

“The equitable share is an important source of funding for basic services, particularly services provided to poor households. National Treasury must therefore balance its constitutional responsibility to enforce financial management requirements; with the need to avoid communities carrying the immediate consequences of failures by municipal institutions and officials.

“The release must accordingly be understood as a conditional release, intended to protect basic service delivery while requiring affected municipalities to correct the serious weaknesses identified through the section 216(2) process,” he noted.

The next step

The move to withhold shares was taken after some municipalities continued to adopt unfunded budgets, accumulate Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE) and fail to meet statutory obligations to Eskom, water boards, SARS, the Auditor-General, and pension funds.

As of Tuesday, some 20 of the initial 69 affected municipalities have already received their full equitable share, 21 have received partial allocations and the remaining 28 have not received allocations to date.

As the allocations are released, Godongwana noted that Treasury will follow this up with:

• Letters to Premiers with strict conditions for consideration in withholding the December 2026 instalment of the Equitable Shares;
• Letters to both MECs for Finance and CoGTA with strict conditions for consideration in withholding the December 2026 instalment of the Equitable Shares; and
• A structured compliance programme will accompany the release. The first formal reporting deadline remains 30 September 2026, in accordance with my July 2026 letter.

Municipalities are also required to submit quarterly reports and supporting evidence. 

“They must also demonstrate achievement of the applicable UIFWE processing and reduction requirements. National Treasury will then require further measurable improvement during October and November 2026.

“By 31 October 2026, affected municipalities must demonstrate processing of matters outstanding as at 30 June 2026 through the required legal processes.

“By 30 November 2026, there should be a demonstrable increase in the number of matters as at 30 June 2026 that have progressed through the UIFWE reduction and disciplinary board processes to conclusion,” Godongwana highlighted.

Municipalities’ progress will be measured in reductions in UIFWE as well as the implementation of consequence management actions.

The National Treasury will “assess whether matters have moved through the required investigation, disciplinary, recovery and criminal processes”.

“National Treasury recognises that communities should not carry the immediate consequences of failures by municipal institutions. That consideration is central to the decision to release the remaining July 2026 transfers.

“National Treasury remains committed to support municipalities during this period on their road to compliance and to assist municipalities in avoiding another withholding of the equitable share,” Godongwana concluded.

The next tranches of the equitable shares are expected to be disbursed in December this year and March 2027. – SAnews.gov.za

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Science, Technology and Innovation Minister, Prof Blade Nzimande, says mineral beneficiation must sit at the absolute centre of Africa’s economic conversation to move the continent beyond merely exporting raw materials.

Speaking during a panel discussion on critical minerals at the Southern African Development Community (SADC) Industrialisation Week, currently underway at the Inkosi Albert Luthuli ICC, Minister Nzimande outlined how strategic local processing can create regional value chains and sustainable economic growth.

Minister Nzimande opened his remarks by referencing President Cyril Ramaphosa’s keynote address at the 2026 Africa Energy Indaba.

He echoed the President’s assertion that Africa’s vast underground critical minerals are increasingly essential for global technological and energy sector applications.

“President Ramaphosa emphasised that the promise of Agenda 2063 relies not just on universal access to energy, but on productive access.

“This is access that empowers African economies to move beyond merely exporting raw materials and towards localised value addition,” Nzimande said.

The Minister stressed that critical minerals have become the bedrock of modern economic growth, industrial competitiveness, energy security and the global transition to clean technologies.

For the SADC region, he noted, the challenge is no longer about proving the existence of these resources, but actively leveraging them to unlock widespread industrialisation.

Articulating the perspective of the Department of Science, Technology and Innovation (DSTI), the Minister highlighted that critical minerals are strategic enablers of future industries rather than ordinary commodities.

He reflected on two primary areas driving South Africa’s transition: the Hydrogen Economy and the Battery Economy.

He indicated that both sectors serve as central pillars of South Africa’s Decadal Plan for Science, Technology and Innovation (2022–2032), which directly supports the nation’s just energy transition and inclusive economic growth.

To strengthen local capacity and unlock the high-value potential of these clean energy sectors, Minister Nzimande reminded delegates of the country’s long-standing institutional foundations.

This includes the government’s approval and deployment of the 15-year Hydrogen South Africa (HySA) strategy, launched in 2007, which established a strong foundation for hydrogen and fuel cell technologies.

The Department of Science, Technology and Innovation continues to lead public-private partnership models aimed at bridging foundational scientific research with market-ready, practical manufacturing solutions across the SADC region. –SAnews.gov.za

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