Financial management remains subpar in many municipalities, with unauthorised irregular fruitless and wasteful expenditure increasing to R268.13bn in the 2024/2025 financial year from R264.1bn previously, the National Treasury says.
Non-compliance with supply chain management regulations is still a headache, with many municipalities either failing to update their policies or not developing them at all, it said in its latest Municipal Finance Management Act (MFMA) compliance report.
“This assessment of municipalities’ compliance with the MFMA in 2024/25 reveals a governance environment that remains fragile and uneven, despite incremental progress in areas such as cost containment and submission rates of annual financial statements,” it said.
“Persistent systemic weaknesses — including unstable leadership, inadequate internal controls and weak consequence management — continue to undermine financial integrity and service delivery.”
Only 127 municipalities, or 49%, had systems of delegation — which are crucial for maintaining good governance, financial accountability, and effective service delivery — in place in the 2024/2025 financial year.
The Treasury has increasingly become impatient with financial mismanagement in municipalities, with finance minister Enoch Godongwana last week ordering Johannesburg mayor Dada Morero to immediately halt a R10.3bn wage increase agreement the department said the city could not afford.
The number of municipalities with updated cost containment policies increased to 170 in 2024/2025 from 161, and these collectively achieved R5.06bn in cost containment savings, primarily through reductions in consultancy and other related expenditure
Its latest compliance report focuses on:
- systems of delegation;
- senior management vacancies;
- asset management;
- cost containment;
- unauthorised, irregular, fruitless and wasteful expenditure (UIFWE);
- consequence management; and
- supply chain management.
“Though municipalities are required to review their supply chain management processes and implement corrective measures to resolve issues identified by the auditor-general, many fail to do so effectively. This has resulted in recurring irregularities, including irregular and wasteful expenditures,” it said.
Many municipalities lack robust systems to ensure the timely implementation of council resolutions on the recoverability or write-off of UIFWE, with high levels of write-offs rather than recoveries indicative of a failure to hold individuals accountable for financial misconduct.
The Treasury found the number of municipalities with established disciplinary boards increased to 178 in 2024/2025, but flagged concern about:
- the decline in the reporting of financial misconduct allegations in municipalities;
- the number of financial misconduct cases investigated; and
- the number of officials who faced disciplinary action.
It said the regressions may be an indication of negative factors, including:
- delays in instituting and/or in proceeding with disciplinary cases;
- weak enforcement of policies within municipalities; and
- possibly a lack of understanding of disciplinary processes by municipalities.
The number of municipalities with updated cost containment policies increased to 170 in 2024/2025 from 161, and these collectively achieved R5.06bn in cost containment savings, primarily through reductions in consultancy and other related expenditure.
However, overspending on overtime still poses a significant fiscal risk and highlights weaknesses in payroll management and internal controls. Treasury noted a significant number of municipalities that relied heavily on consultants.
Business Day
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