- Only 39 municipalities, representing 15% of the total, achieved clean audits in the 2024/25 financial year.
- Municipalities accumulated R145.21 billion in irregular expenditure since 2021/22, while infrastructure failures continue to affect water, sanitation and electricity services.
- None of South Africa’s eight metropolitan municipalities achieved a clean audit, with governance and financial management challenges persisting across major urban centres.
South Africa’s local government sector continues to face serious governance, financial management and service delivery challenges, with limited improvement recorded during the term of the country’s sixth administration, according to Auditor General Tsakani Maluleke.
Presenting the Auditor General South Africa’s 2024/25 local government audit outcomes report to Parliament, Maluleke said municipalities have made only modest gains in strengthening governance and improving service delivery despite increased oversight and support from national and provincial government structures.
Residents and businesses across the country continue to experience unreliable services, deteriorating infrastructure, environmental risks and weakening municipal finances, she said.
Only 39 municipalities, representing 15% of the country’s municipalities, achieved clean audits during the reporting period. Together, these municipalities managed R52.6 billion, accounting for just 8% of total local government expenditure.
At the same time, 38 municipalities, also representing 15% of the sector, regressed since the 2020/21 financial year. These municipalities account for 24% of total local government expenditure and include three metropolitan municipalities and several councils that previously maintained clean audit records.
While overall progress remains limited, the Auditor General highlighted several encouraging developments. The number of municipalities receiving disclaimed audit opinions fell sharply from 29 in 2020/21 to just eight in 2024/25, the lowest level recorded in years.
The proportion of municipalities receiving unqualified audit opinions increased to 61%, matching levels last seen in 2015/16. Timely submission of financial statements also reached a record 98%.
Maluleke attributed these improvements to stronger executive support from national and provincial governments, increased parliamentary oversight and the implementation of the Auditor General’s material irregularity process.
Despite these gains, municipal financial reporting remains a significant concern. A total of 195 municipalities, or 76%, submitted financial statements containing material misstatements. Without corrections made during the audit process, only 24% of municipalities would have received unmodified audit opinions.
The report also highlights persistent weaknesses in municipal performance reporting. Material findings relating to the usefulness and reliability of performance information were reported at 123 municipalities, representing 48% of the sector.
Municipalities continue to rely heavily on external consultants despite rising costs and limited improvement in reporting quality. During 2024/25, 225 municipalities spent R1.61 billion on financial reporting consultants. However, 61% of municipalities that used consultants still submitted financial statements containing material misstatements.
Financial health across the sector remains under pressure. Only 35% of municipalities were assessed as having good financial health, while 40% were classified as concerning and 25% as unfavourable.
More than half of municipalities lacked sufficient current assets to meet short term obligations, while 72% did not have enough cash to pay creditors. In addition, 54 municipalities disclosed uncertainty about their ability to continue operating as going concerns.
Budget discipline also continues to deteriorate. During 2024/25, 116 municipalities adopted unfunded budgets worth R288.17 billion, committing to expenditure without identifying sustainable funding sources.
Since 2021/22, municipalities have accumulated R118.13 billion in unauthorised expenditure and R145.21 billion in irregular expenditure. In 2024/25 alone, irregular expenditure reached R40.14 billion, with 87% linked to procurement and contract management failures.
Revenue collection challenges are compounding financial pressures. Municipalities took an average of 129 days to collect outstanding debt and wrote off R62.12 billion in unrecoverable debt.
Infrastructure losses remain substantial. Water distribution losses amounted to R14.73 billion, while electricity losses reached R21.63 billion during the reporting period.
Infrastructure delivery performance also remains weak. Auditor General South Africa assessed 129 infrastructure projects with a combined value of R14.16 billion and identified findings on 78% of them. Projects experienced average delays of 25 months, with housing developments recording average delays of 39 months.
Environmental compliance is another growing concern. Of 35 wastewater treatment facilities inspected, 63% failed to meet required effluent standards, resulting in pollution of rivers and coastal systems. Meanwhile, 97% of landfill sites inspected were not operating in accordance with licence conditions.
South Africa’s metropolitan municipalities continue to show declining audit outcomes despite managing more than half of local government expenditure and serving approximately 24.9 million residents.
None of the eight metros achieved a clean audit in 2024/25. The number of metros receiving qualified audit opinions increased from two to five during the administration’s term.
The Auditor General reported material compliance findings at every metro and noted that metropolitan municipalities and their entities accumulated R73.87 billion in irregular expenditure over the four year period, including R23.14 billion in 2024/25.
According to Maluleke, persistent non-compliance, weak accountability structures and inadequate consequence management continue to undermine governance across the municipal sector.
The report concludes that poor audit outcomes and municipal failures are rooted in ongoing accountability failures at multiple levels. Accounting officers, senior managers, mayors and councils continue to fall short of their legislative responsibilities, while weaknesses in institutional capability and integrity remain major obstacles to improved financial management and service delivery.
The Auditor General calls for stronger political leadership, professionalisation of municipal administration, improved accountability and coordinated support from all spheres of government to restore confidence in local governance and improve essential service delivery.
Author: Bryan Groenendaal
