Metros ‘regress’ as audit outcomes reveal weak financial discipline, service delivery failures

Auditor-general (AG) Tsakani Maluleke has raised the alarm over what she describes as “concerning regressions” in the audit outcomes of the country’s eight metros, highlighting weak financial discipline; deteriorating service delivery; and the flight of capital from municipalities.

Tabling the local government audit outcomes for the 2024/25 financial year at the co-operative governance and traditional affairs portfolio committee meeting in parliament on Wednesday, Maluleke said of the 257 municipalities, only 39 achieved clean audits — down from 41 achieved in the previous period (2023/24).

While the City of Cape Town was the only metro in the country to receive a clean audit opinion in 2023/24, with three others achieving unqualified audit opinions with findings and four others qualified with findings, none of the eight metros achieved a clean audit in 2024/25, and the number of metros with qualified audit opinions increased from four to five.

The metros of Cape Town, eThekwini and Johannesburg achieved unqualified audit opinions with findings, with Ekurhuleni, Tshwane, Buffalo City, Mangaung and Nelson Mandela Bay all achieving qualified audit opinions with findings.

“The regression in audit outcomes among the metros is particularly concerning, given that metros accounted for R335.9bn [54%] of the 2024/25 estimated local government expenditure budget. Consequently, deficiencies in financial and performance management within these municipalities have the potential to negatively affect about 8.9-million households [46%],” Maluleke said.

“The regressed municipalities accounted for 24% of the total local government budget. Regressions should be a rare occurrence, particularly given the lack of significant changes in legislation and accounting and performance reporting requirements during this administration.”

We have reached a milestone of 98% timely submissions from municipalities across the country. This 98% is a historic mandate. This milestone is a credit to support by provincial and national leaders. Municipalities are changing their behaviour and are subjecting themselves to scrutiny

—  Tsakani Maluleke, auditor-general

The local government sector is grappling with poor service delivery, maladministration, lack of capacity and corruption, and its worsening state has spurred the government to focus the second phase of Operation Vulindlela on fixing councils. Vulindlela is a joint initiative of National Treasury and President Cyril Ramaphosa’s office created in 2020 to address bottlenecks stifling economic growth.

Maluleke said the 39 municipalities that achieved clean audits managed only R52.6bn (or 8%) of the R622.5bn expenditure budget in local government.

At 21, the Western Cape led the number of municipalities with clean audits, followed by the Eastern Cape (8), KwaZulu-Natal (4), Limpopo (2), Gauteng (2), Mpumalanga (1), and the Northern Cape (1); the Free State and North West had zero.

Municipalities that achieved the following:

• unqualified audit opinions with findings increased from 99 to 117 during 2024/25;
• qualified opinions with findings decreased from 95 to 85;
• adverse opinions with findings decreased from seven to five; and
• disclaimed opinions with findings, increasing to eight from 15; while
• there were two outstanding audits from the Nala and Maluti-A-Phofung local municipalities, both in the Free State.

Business Day