The Municipal Finance Management Act (MFMA) compliance report for 2024/25, released by the National Treasury, provides a constructive assessment of the state of municipal financial governance in South Africa. Drawing on data submitted by municipalities, the report highlights areas of progress while laying bare persistent weaknesses that continue to undermine service delivery, accountability and public trust.
One of the most encouraging findings in the report is the improvement in statutory compliance with the submission of annual financial statements.
Timely submission rates have increased steadily, reaching 98% in 2024/25. This demonstrates that sustained oversight, direct engagement, and escalation by the National Treasury and provincial treasuries can yield measurable results.
However, the report cautions that improved submission does not automatically translate into improved financial management. Data credibility remains a major concern, with several municipalities submitting incomplete or inaccurate information, delaying effective intervention and undermining oversight efforts. Weak internal controls, poor leadership stability and limited consequence management continue to drive many of the adverse audit outcomes.
A recurring theme throughout the report is the destabilising effect of senior management vacancies and prolonged acting appointments. Critical posts such as municipal manager, chief financial officer, chief audit executive and head of supply chain management remain vacant or filled in an acting capacity in many municipalities. The report demonstrates a strong correlation between leadership instability, poor audit outcomes and rising levels of unauthorised, irregular, fruitless and wasteful expenditure (UIFWE).
Financial misconduct cases are often delayed, not finalised, or resolved through write‑offs rather than recoveries or sanctions
Although more municipalities have established disciplinary boards, the actual application of consequence management remains uneven. Financial misconduct cases are often delayed, not finalised, or resolved through write‑offs rather than recoveries or sanctions. Criminal referrals to the South African Police Service have declined, signalling a weakening of accountability, particularly at senior management level.
The report makes it clear that the National Treasury is moving beyond passive monitoring towards more assertive, data‑driven enforcement and support.
First, the Treasury has rolled out and institutionalised web‑enabled oversight systems, including the Muni eMonitor, the financial management capability maturity model and the audit action plan system. These platforms allow for real-time monitoring of compliance, early identification of risk areas and structured tracking of corrective actions arising from auditor‑general findings.
Second, the Treasury continues to invest heavily in capacity building, working closely with provincial treasuries to provide hands‑on technical support, targeted training and specialist advisory services. These interventions focus on high‑risk areas such as asset management, supply chain management, revenue management and budget management, as well as UIFWE governance.
Third, the Treasury has strengthened its escalation and enforcement approach. Municipalities that persistently fail to comply with MFMA requirements are formally engaged, written to, and in some cases escalated by the minister of finance. This approach has already contributed to improved submission of annual financial statements.
The Treasury last year also notified select municipalities of our intention to invoke section 216 (2) of the constitution by withholding funding due to persistent noncompliance. We have noted some improvement since initiating such a measure, and we will continue using this instrument in future to enforce compliance by municipalities.
Finally, the Treasury is advancing regulatory and policy reform, including tightening cost‑containment measures, strengthening UIFWE reduction strategies and reinforcing consequence management frameworks to ensure that financial misconduct leads to real accountability rather than administrative closure.
The 2024/25 MFMA compliance report reinforces a clear message: while progress is possible, sustainable improvement depends on stable leadership, credible data, robust internal controls and consistent consequence management. The Treasury’s increasingly assertive oversight, combined with targeted support and enforcement, is repositioning the MFMA as a living accountability framework rather than a compliance checklist.
The effectiveness of these measures will ultimately be judged by improved audit outcomes, reduced financial misconduct and, most importantly, better service delivery for communities.
- McComans is chief director for MFMA implementation at the National Treasury
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