The National Treasury report paints a troubling picture of weak accountability, leadership instability, persistent supply chain failures and growing reliance on consultants across local government, despite some improvements in financial reporting and cost-containment measures.
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South Africa’s municipalities are facing mounting governance and financial management failures, with irregular, fruitless and wasteful expenditure rising to R268.13 billion in the 2024/25 financial year, according to a new report released by the National Treasury on Wednesday.
The report paints a troubling picture of weak accountability, leadership instability, persistent supply chain failures and growing reliance on consultants across local government, despite some improvements in financial reporting and cost-containment measures.
In its “Strengthening Municipal Financial Management – MFMA Compliance Report 2024/25”, Treasury said weak internal controls and poor consequence management continue to undermine service delivery and public confidence in municipalities.
“The credibility of municipal data remains a major concern,” Treasury said in the report, noting that many municipalities continue to submit incomplete or inaccurate information. It warned that the delays in obtaining reliable audited data “undermines proactive intervention” and weakens fiscal oversight.
One of the most alarming findings was the continued increase in unauthorised, irregular, fruitless and wasteful expenditure, commonly referred to as UIFWE. Treasury said the national UIFWE balance rose from R264.10bn in 2023/24 to R268.13bn in 2024/25, largely because of “systemic failures in internal controls and weak consequence management”.
The report found that municipalities were increasingly relying on write-offs instead of recovering funds or holding officials accountable for financial misconduct. Criminal referrals to the South African Police Service also dropped sharply, from 37 municipalities in 2023/24 to only 20 municipalities in 2024/25.
Treasury further warned that instability in senior management positions continues to affect governance and audit outcomes. Although 84% of critical senior management posts were filled by the end of June 2025, vacancies remained high in strategic roles such as chief risk officer, chief audit executive and chief financial officer.
The report noted that there were 51 vacant chief risk officer positions nationally, 34 vacant chief audit executive posts and 13 chief financial officer vacancies. Treasury linked prolonged acting appointments and vacancies to poor audit outcomes, rising irregular expenditure and weak financial controls.
The Auditor-General was cited in the report as having repeatedly warned that poor skills, governance failures and lack of accountability remain the root causes of dysfunction in local government.
Supply chain management was identified as another high-risk area, with Treasury saying many municipalities either failed to update procurement policies or continued to abuse emergency procurement mechanisms.
“Systemic issues such as overreliance on emergency procurement and piggybacking on other contracts indicate poor planning and weak contract management,” the report stated.
The findings also revealed uneven compliance with systems of delegation, which are intended to ensure accountability in municipal decision-making.
Only 127 municipalities had properly signed systems of delegation in place during 2024/25, down from 130 in the previous year. Non-responses by municipalities increased significantly, which Treasury said may indicate growing administrative disengagement.
Despite the governance concerns, the report highlighted some positive developments. Municipalities collectively achieved R5.06bn in cost-containment savings, mainly through cuts to consultancy and related expenditure.
The number of municipalities with updated cost-containment policies also increased from 161 to 170. However, Treasury cautioned that overtime overspending of R316.6 million remained a major fiscal risk, particularly in the Eastern Cape and KwaZulu-Natal.
Treasury also recorded an improvement in annual financial statement submissions. Submission rates increased from 91% in 2021/22 to 98% in 2024/25, aided by provincial treasury interventions and pressure from the Minister of Finance on municipalities that repeatedly missed deadlines.
Still, Treasury said the quality of financial statements remained poor and stressed that stronger internal controls, stable leadership and effective consequence management were urgently needed to restore financial integrity in municipalities.
“The MFMA remains the cornerstone of municipal financial governance – its effective implementation is essential for rebuilding trust and achieving fiscal resilience,” the report said.
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