CAPE TOWN, Wednesday 21 October 2026 — National Treasury will allocate an additional R21.8 billion to the local government equitable share and increase the general fuel-levy allocation to metropolitan municipalities by R13.4 billion, Finance Minister Enoch Godongwana announced on Wednesday.
The additional funding forms part of government’s revised medium-term fiscal framework and is intended to help municipalities meet rising service-delivery costs.
The announcement comes two weeks before South Africans elect new municipal councils.
More funding for basic services
Godongwana said the additional R21.8 billion would help cover the increasing bulk costs of providing free basic water, sanitation, electricity and refuse removal.
The local government equitable share supports municipalities in delivering essential services, particularly to poorer households.
The minister said local government would receive 10% of available non-interest spending over the medium term.
National departments will receive 47.4%, while provinces will receive 42.6%.
Treasury described the increased local government share as an important milestone.
Metros receive larger fuel-levy allocation
Treasury will also increase the general fuel-levy allocation to metropolitan municipalities by R13.4 billion over the medium term.
The adjustment will restore metros’ share to 23%.
The allocation is intended to support metropolitan finances at a time when cities face increasing infrastructure and operational pressures.
Major municipalities including Johannesburg, Tshwane, Ekurhuleni, eThekwini, Cape Town, Nelson Mandela Bay, Mangaung and Buffalo City will be affected by the broader metropolitan funding framework.
The precise allocations to individual metros will depend on the applicable revenue-sharing arrangements.
Smart-meter funding increased
Godongwana also announced an additional R3.5 billion over the Medium-Term Expenditure Framework for the expansion of municipal smart meters.
The new funding supplements R2 billion already allocated.
Treasury says smart meters can improve revenue collection and strengthen municipalities’ ability to account for electricity and other services.
The minister cited Sol Plaatje, Kannaland and Bela-Bela as municipalities where improved revenue collection had demonstrated the potential benefits of these interventions.
Treasury demands better financial management
The additional allocations come amid continuing concerns about municipal financial management.
Godongwana said many municipalities spend too much on operating costs while failing to make sufficient provision for infrastructure maintenance and investment.
He also referred to Treasury’s earlier decision to withhold equitable-share transfers from 69 municipalities that had persistently failed to meet financial obligations.
By the end of July, 37 had concluded council-approved repayment plans, while R4.2 billion had been paid to creditors.
The minister said additional funding must be accompanied by stronger financial controls and improved service delivery.
New councils inherit funding responsibilities
The 4 November local government elections will determine the councillors responsible for overseeing municipal budgets during the next term.
Treasury is expected to complete its review of the municipal funding model by the end of 2026.
The review will consider how municipalities can strengthen their finances while maintaining infrastructure and delivering essential services.
