The South African Local Government Association (SALGA) welcomes the release of the Auditor-General’s 2023/2024 Municipal Audit Outcomes and commends the Auditor-General of South Africa (AGSA) for its continued efforts in promoting transparency, accountability, and good governance within local government.

SALGA extends its appreciation to all municipalities that submitted their Annual Financial Statements within the legislated timeframe and notes with encouragement the overall stability reflected in the audit outcomes, with 140 municipalities (55%) achieving unqualified and clean audit outcomes. These municipalities are responsible for managing over R378 billion, or 66% of the total local government budget of R575 billion an indication that most public funds are being managed with a degree of accountability.

The increase in clean audits from 34 in 2022/23 to 41 in 2023/24 is commendable and reflects the commitment of municipal leadership and officials to uphold financial discipline, internal controls, and consequence management. This improvement must be sustained and scaled across all municipalities.

In the effort to improve sound financial management and governance over a 5-year period, a lot has been done, although much more effort and dedication should be encouraged to improve the overall sustainability in local government in the financial health and service delivery to its communities.

Urgent Call to Action: Addressing Poor Audit Performance

However, SALGA remains deeply concerned that 45% of municipalities received audit outcomes that fall below the standard of unqualified audits. This ongoing underperformance signifies the need for urgent reform, improved accountability, and consistent consequence management. The non-submission of financial statements and the recurrence of fruitless and wasteful expenditure must be decisively addressed.

SALGA reiterates its call for zero tolerance towards the unactioned financial misconduct of previous years. By the end of the 2023/24 financial year, municipalities must take concrete steps to recover funds and ensure that every incident of irregular, unauthorised, fruitless, or wasteful expenditure is acted upon.

Celebrating Excellence: Lessons from Leading Municipalities

Municipalities that have consistently maintained clean audits since 2016/17 serve as beacons of excellence and best practice.

These include:

• Midvaal Local Municipality (Gauteng)
• Cape Winelands District Municipality (Western Cape)
• Overstrand Local Municipality (Western Cape)
• Witzenberg Local Municipality (Western Cape)
• Cape Agulhas Local Municipality (Western Cape)
• These municipalities should be studied and benchmarked for the replication of their governance models across the country.

Key Drivers of Positive Audit Outcomes

SALGA echoes AGSA’s observation that leadership stability, accountability & adequate capability, particularly in Municipal Manager (MM) Chief Financial Officer (CFO) and Infrastructure HOD positions, is a critical determinant of improved audit performance. Municipal councils must prioritise filling these posts with skilled, ethical professionals and ensure that oversight by mayors and speakers is executed without fear or favour.

Rising Municipal Debt Jeopardises Financial Health

As of 31 December 2024, municipalities are owed over R405 billion by consumers. This unsustainable debt burden severely undermines municipalities’ ability to meet their financial obligations, including payments to service providers such as Eskom and water boards. SALGA reaffirms its call for strict implementation of credit control policies and urges residents and institutions to honour their municipal bills (with an emphasis of debt owed by government department).

Systemic Constraints: Reforming the Fiscal Framework

SALGA also raises concern over the structural limitations of South Africa’s fiscal framework. Municipalities are tasked with delivering nearly 46% of government functions yet receive only 9.1% of nationally raised revenue.

This funding mismatch, along with unfunded mandates, and non-payment by government departments and SOEs, continues to hinder municipalities’ ability to meet their constitutional responsibilities.

SALGA’s Continued Commitment to Support and Reform

As part of its ongoing support, SALGA will intensify its efforts to build leadership, governance, financial management, and institutional capacity in municipalities though its programmes. SALGA will engage more actively with member municipalities, drawing on experienced former councillors and mayors to strengthen council oversight and accountability.

SALGA intensify its support to build capability in both administration and political leadership (internal capacity to reduce reliance on consultants), support and advice on accountability and consequence management (development of policies), Use of technology to address some of the findings.