Godongwana announces reforms to ensure municipal funds used to deliver services

Budget 2026 may be remembered for a number of things, but one that stands out is National Treasury's attempt to limit the amount of money that provincial and municipal authorities misspend or waste.

Delivering the Budget on Wednesday, Finance Minister Enoch Godongwana said that many municipalities still find themselves in financial distress and as a result fail to deliver the most basic services.

The reforms he announced in local government include shifting to a performance-linked utility model for water and electricity services. This is aimed at strengthening financial sustainability, accountability and transparency.

"National government is now moving from oversight to active intervention."

Stephen Grootes interviews Duncan Pieterse, Director General of National Treasury, about the implementation of this reform.

The most practical way Treasury is giving effect to this is through its influence over conditional grants, Pieterse says.

He concedes that when it comes to local government equitable share allocations which councils are entitled to, Treasury is more limited.

"We can withold those, but eventually we do have to release them because councils have an entitlement to those funds in many respects. However, when it comes to conditional grants which are mainly for infrastructure delivery, for example for rural electrification or basic services, we have quite a bit more discretion."

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Pieterse emphasizes that this does not mean communities will be denied the services they need.

He explains that they're introducing a dual model differentiating between municipalities able to deliver this infrastrucutre through conditional grants, that will continue to access their funding, and those with a track record of being incapable of managing delivery of infrastructure projects.

"In their localities, those funds will be redirected - either to a capable district that can spend the funds OR to the DBSA (Development Bank of Southern Africa) and other delivery agencies that can provide infrastructure on their behalf, so the effect will be lower budgets for those municipalities. But because the money is being transferred to others who will deliver on their behalf, the infrastructure will still be delivered."

To listen to the full conversation, scroll up the interview audio at the top of the article (municipalities discussion at 4:12)