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South Africa‘s National Treasury said Tuesday it would withhold funding from more than a quarter of the country’s municipalities, including economic hub Johannesburg, citing financial mismanagement.
Treasury said it would suspend July transfers to 69 municipalities across all nine provinces to “instil fiscal discipline and ensure public money is properly managed.”
Municipalities fund themselves mainly through property rates and service charges, but also receive an equitable share of revenue from the national coffers.
The funding cut adds to pressure on Johannesburg’s finances, with the city owing billions of rand to power and water utilities and struggling to maintain basic services, including road repairs.
Despite being home to Africa’s richest square mile, Johannesburg has grappled with the same municipal failures seen across much of South Africa, from burst water pipes and potholes to mounting garbage and decaying infrastructure.
Alongside Johannesburg, funding will be withheld from municipalities including Emfuleni, where the country’s second-largest party, the Democratic Alliance, recently won a ward by-election from the African National Congress.
Other affected municipalities include Nelson Mandela Bay and Buffalo City in the Eastern Cape, Mopani in Limpopo province and Mangaung in the Free State province.
In May, Finance Minister Enoch Godongwana threatened to withhold Johannesburg’s equitable share for July if the mayor failed to scrap a R10.3 billion ($634 million) wage offer that the council had made to city workers who had wanted to strike last year.
Johannesburg Mayor Dada Morero did not immediately respond to a request for comment.
Last year, President Cyril Ramaphosa lashed out at the state of the city of six million people, describing it as “not very pleasing.”
Treasury said the move, which comes ahead of local elections in November, was not expected to affect service delivery.
Transfers will resume once affected municipalities meet Treasury’s conditions and provide proof that they have done so. One requirement is a minimum 25 percent reduction in unauthorised, irregular, fruitless and wasteful expenditure.
