South Africa’s municipalities remain an ongoing source of concern for the National Treasury. Despite years of attempted interventions to support them to achieve sustainability, the outcomes remain mixed.

This is the message contained in the latest compliance report on the Municipal Finance Management Act (MFMA), covering the 2024/25 financial year, which was released this week.

The report noted that some 84% of critical senior management positions had been filled, a marginal increase from the 82% in 2023/24. Vacancies remained particularly pronounced for chief financial officers, chief risk officers, and chief audit executives.

There was a slight decline – from 130 in 2023/24 to 127 in 2024/25 – of municipalities with proper systems of delegation. These ensure that responsibilities are properly assigned and agreed upon, and are critical for good governance and accountability.

The quantum of unauthorised irregular, fruitless, and wasteful expenditure rose from R264 billion in 2023/24 to R268 billion in 2024/25. This was the result of “failures in internal controls and weak consequence management”.

Supply chain management regulations were frequently not observed, and many did not deal with issues that the auditor-general had identified. This meant that problems frequently recurred.

Some 178 municipalities had disciplinary boards, which were mandated by the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings. The report noted, though, that that there had been a “decline in the reporting of financial misconduct allegations in municipalities, the number of financial misconduct cases investigated, and the number of officials [against] whom disciplinary actions were taken in relation to financial misconducts”.

There had been a rise in the number of municipalities with cost containment policies (intended to keep down unnecessary or avoidable expenditures), from 161 in 2023/24 to 170 in 2024/25. Over the course of the latter year, municipalities managed a cumulative R5 billion in cost containment, mostly through limiting consultancy spending.

Nevertheless, the report flagged excessive spending on overtime, which highlighted problems with payroll management and controls.

There are 257 municipalities in South Africa. The fact that the report shows that many of them have not met these requirements demonstrates that a profound crisis remains at local government level.

South Africa’s Constitution requires municipalities to fulfil substantial upliftment responsibilities, but many fail in their basic administrative tasks.