National Treasury Withholds Equitable Share: City of Johannesburg Implements MFMA Recovery Measures

Posted 09 July 2026 Written by Acts Online
Category Municipal

Brought to you by SAnews: The City of Johannesburg (CoJ) is implementing corrective financial measures following National Treasury’s decision to withhold its July 2026 equitable share allocation under the Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA).

The withholding of the equitable share, which affected CoJ and 68 other municipalities, was executed by National Treasury as a corrective measure to enforce fiscal discipline and address financial misconduct. In response, CoJ has aligned its Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE) reduction strategy with National Treasury’s guidelines, specifically MFMA Circular 111 and MFMA Circular 68.

To resolve these compliance and cash flow challenges, the municipality has initiated several interventions:

  • Expenditure Regularisation: A total of R918.4 million in expenditure has been regularised following investigations and recommendations by the Municipal Public Accounts Committee (MPAC). Additionally, the boards of municipal entities—including the Johannesburg Roads Agency, City Parks and Zoo, the Johannesburg Development Agency, and Pikitup—regularised a further R878.3 million.
  • UIFWE Driver Identification: The city has isolated specific cost drivers, identifying City Power’s bulk electricity overspending (amounting to R2.1 billion by the end of the third quarter) as the primary driver of new unauthorized expenditure.
  • Creditor Settlements: Outstanding payments to bulk utilities Rand Water and Eskom are scheduled for settlement, while an operational allocation has been prioritised for Pikitup to clear supplier backlogs.
  • Infrastructure Funding: To fund capital expenditure without worsening operational cash flows, CoJ has secured a EUR 200 million (approximately R3.8 billion) multi-year facility from the German Development Bank (KfW) for City Power, alongside R1.75 billion for Johannesburg Water.

Despite the current withholding of the July 2026 allocation, National Treasury has formally confirmed that the City of Johannesburg’s 2026/27 Annual Budget is funded, indicating that the municipality’s broader financial management framework remains solvent while cash flow and revenue collection systems undergo modernization.

What this means for you, your business, or your clients

  • For yourself: No direct individual compliance obligations; however, municipal professionals and residents must prepare for stricter local revenue collection enforcement as the city modernises its billing systems.
  • For your business: Service providers contracting with the City of Johannesburg, particularly those servicing Pikitup, City Power, and Johannesburg Water, should monitor the rollout of the prioritised operational allocations to ensure outstanding invoices are settled.
  • For your clients: Corporate and individual clients operating within the City of Johannesburg must ensure strict compliance with municipal utility payments, as the city is intensifying cost-containment and collection measures to recover operational funds.

Originally published at https://www.sanews.gov.za/south-africa/joburg-working-treasury-resolve-challenges

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