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South Africa’s local government crisis is no longer an annual warning by the Auditor-General reports or municipal budget reports. It is clearly visible in the daily lives of residents: taps without water or with dirty water, sewage in the streets and rivers, electricity blackouts and incorrect rates and taxes accounts, roads that are not repaired, and waste removal failures. The latest National Treasury MFMA Compliance Report 2024/25, together with Finance Minister Enoch Godongwana’s warning to the City of Johannesburg in April 2026, confirms what communities have known for years: too many municipalities are financially distressed, poorly governed and drifting away from their constitutional purpose of basic service delivery.
Two municipalities tell this story particularly well. Emfuleni Local Municipality and the City of Johannesburg are very different in size and economic importance, but they are showing the same disease. Emfuleni serves about 825,000 people (650,000 people living in townships) in a former industrial heartland along the Vaal River. Johannesburg is the country’s largest metropolitan economy, home to about six million people and contributing about 16% to national output. Yet both are drowning in debt, struggling with weak financial controls and facing deep service delivery failures. Emfuleni’s debt is estimated at about R10-billion. Johannesburg’s creditor debt is reported at about R25.2-billion. These are symptoms of institutions that are losing the ability to manage public money and deliver basic services.
South African municipalities have become good at recording failure but poor at correcting it.
The key difference is that Emfuleni is further down the road of collapse. Johannesburg is not yet Emfuleni, but it is moving in the same direction. Emfuleni shows what happens when warnings are ignored for too long. The municipality has recorded massive unauthorised, irregular, fruitless and wasteful expenditure, owes billions to Eskom and Rand Water and has faced repeated bank account attachments. Its environmental failures have also become a criminal justice matter, with its municipal manager facing charges linked to pollution of the Vaal River. Several interventions and financial recovery plans have failed to produce a real turnaround.
Johannesburg’s situation is different because of its scale. When a smaller municipality collapses, the damage is devastating for local residents. When Johannesburg fails, the consequences go far beyond the city. It affects investor confidence, infrastructure networks, provincial finances and the national economy. Treasury’s warning that the City’s cash position was not sufficient to meet large creditor obligations, the suspension of its bond listing after late financial statements, credit-rating pressure and concern from lenders all point to declining confidence in the City’s financial discipline. The metro must restore credibility through clean administration, reliable financial information and hard spending choices.
The common problem in both municipalities is not only the lack of money, its rather weak governance, financial management and accountability. South African municipalities have become good at recording failure but poor at correcting it. Irregular expenditure is identified, investigations initiated, committees meet, reports are compiled and then very little happens in terms of implementation of legislation and regulations. In Gauteng, financial misconduct allegations increased, but the number of officials charged declined sharply over the past few years. Not a single councillor was reportedly charged with a financial offence in the period under review. This sends the wrong message: municipal failure may be recorded, but it is rarely punished, a lack of consequences.
This culture of impunity damages every part of municipal management. Officials learn that late financial statements, weak procurement controls, poor contract management and unpaid creditors carry limited personal consequences. Councillors learn that political survival matters more than financial discipline. Communities learn that complaints do not translate into action. Over time, the budget becomes a political document rather than a service delivery contract.
The first reform must be real consequence management. The Municipal Finance Management Act already contains many of the tools needed. What is missing is consistent enforcement. Municipalities that repeatedly record irregular expenditure without completing investigations should face automatic escalation. Accounting officers and senior managers who ignore financial recovery plans should face disciplinary action. Where there is evidence of fraud, corruption or criminal irregular expenditure, cases must be referred to law enforcement agencies within clear timeframes. The public must also be told how many cases were opened, how many were completed and what action was taken.
Second, local government financial management must become more professional and less political. Chief financial officers, municipal managers, internal auditors and supply chain officials must be appointed on competence, experience and ethical record, not factional loyalty. Minimum competency rules should be enforced without exception. Where municipalities lack capacity, provincial and national support must be linked to skills transfer, not endless dependency on consultants. Consultants may assist in emergencies, but they cannot become a permanent substitute for a functioning finance department.
Third, municipalities must rebuild the basics of budgeting. Many municipal budgets are not credible because revenue estimates are inflated, expenditure commitments are understated and unfunded mandates are quietly pushed into future years. A proper municipal budget should be cash-backed, realistic and linked to a funded maintenance plan. Salary agreements, political projects and new capital commitments should not be approved unless the municipality can show how they will be paid for over the full medium term. Treasuries should refuse budgets that are clearly unfunded and require correction before the financial year begins.
Fourth, revenue management must improve. Municipalities cannot survive if they do not bill accurately, collect consistently and protect the revenue base. This requires updated customer databases, functioning meters, better credit control, fair indigent registers and serious action against illegal connections. It also requires political courage. Councillors often resist credit control measures because they fear losing support. But the alternative is worse: unpaid creditors, collapsing infrastructure and poorer services for everyone, especially the poor.
When residents can see the numbers, it becomes harder for politicians to hide behind slogans.
Fifth, water and electricity losses must be treated as financial emergencies. Emfuleni and Johannesburg both lose enormous volumes of treated water. These losses are not only technical problems. They lost revenue, wasted public money and weakened service delivery. Every distressed municipality should have a funded loss reduction programme, quarterly reporting and clear targets for fixing leaks, replacing meters, repairing networks and reducing non-revenue water. The same applies to electricity losses. If bulk services are not managed properly, no financial recovery plan will succeed.
Sixth, procurement must be cleaned up. Supply chain management is where many municipalities lose control of value for money. Contract registers should be public. Deviation reports should be limited and explained. Large tenders should include lifecycle costing, not only the lowest initial price. Municipal public accounts committees must be strengthened to track whether audit findings are actually implemented. The Auditor-General’s material irregularity process should also be supported by faster disciplinary and recovery action.
Finally, residents must be given better information. Municipalities should publish simple monthly dashboards showing cash on hand, creditor debt, Eskom and water board arrears, collection rates, audit action progress, overtime spending and infrastructure grant performance. When residents can see the numbers, it becomes harder for politicians to hide behind slogans.
Emfuleni did not collapse overnight. It arrived there through years of weak leadership, poor financial discipline and limited consequences. Johannesburg still has time to avoid the same destination, but only if the warning signs are taken seriously now. Local government is where democracy becomes real. It is where citizens experience the state most directly. If municipalities cannot manage money honestly and competently, they cannot deliver basic services. South Africa does not need another report explaining the crisis. It needs the courage to act before more municipalities become ungovernable. DM
Side by side: Shared warning signs
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