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The Eastern Cape, where most municipalities are plagued by weak internal controls, aims to bring in external experts to teach officials in its 39 municipalities basic accounting skills, reducing reliance on costly outsourced accounting services.
The move exposes the sheer dearth of critical skills at local government level in the province.
Regarded as one of South Africa’s poorest provinces, the Eastern Cape comprises two metropolitan municipalities, six district municipalities and 31 local municipalities.
In June, auditor-general Tsakani Maluleke said the province had made some progress in municipal audit outcomes over the past five years, but persistent governance weaknesses, struggling metros and service delivery failures continued to hamper progress, she warned.
She credited the Eastern Cape provincial treasury, the co-operative governance department, and the premier’s office for providing technical support to struggling municipalities.
However, the province has expressed its dissatisfaction with the progress made in the lead-up to what is expected to be hotly contested local government elections, slated for the first week of November.
To this end, the province’s department of co-operative governance has gone to market to establish a panel that will, over the next year, capacitate officials at the municipalities across the province, including the two metro municipalities, Buffalo City and Nelson Mandela Bay, with financial skills to wean them off their dependence on consultants.
“The directorate: municipal development finance & supply chain has identified a gap in the training of municipal officials in the financial spectrum, specifically on supply chain management, revenue and debt management, asset management, internal audit and risk audit,” the request for proposals reads.
“This is manifested by the serious negative audit outcomes in municipalities, with only eight municipalities with clean audits and the most qualified audit outcomes on financial management.
“Having sound financial management in municipalities is essential to maintain effective service delivery to the communities.
“The municipal capacity development directorate is intending to launch a large-scale training programme targeting municipal councillors and officials. These training programmes will cover contemporary and compliance topics to assist municipal leadership to engage with the demands.”
Read: Metros ‘regress’ as audit outcomes reveal weak financial discipline and service delivery failures
The tender lists seven key outcomes the province wants to achieve through the process.
Chief among these is to reduce the use of financial management consultants, give municipal employees an understanding of how to manage public funds and reduce waste.
Operation Vulindlela’s second phase targets local government and municipal reform to fix failing water and electricity infrastructure. The initiative focuses on professionalising municipal utilities, ring-fencing revenue for maintenance, and addressing severe financial distress across South Africa’s local authorities.
Marie Antelme, an economist at Coronation, in a second quarterly review, said with local elections approaching, municipalities face a sharper choice between preserving political discretion and accepting the accountability needed to restore essential services.
“Out of the 257 municipalities, revenue and receivables were materially misstated before audit by 162 municipalities. This often occurs due to incorrect billing and poor debt management. Asset records were materially misstated in 129 municipalities, weakening maintenance and renewal planning,” Antelme said.
“Infrastructure audits found problems in 101 projects: 72 were delayed by an average of 25 months, 70 had cost-management failures or losses, and 30 produced poor-quality work. The auditor-general also identified 116 municipalities with unfunded budgets, 174 whose short-term debts exceeded available cash, and 62 with going-concern uncertainty. Average creditor-payment time was 113 days, while repairs and maintenance averaged only 3% of asset value.”
Old Mutual’s fixed-income outfit, Futuregrowth, in its review of the first half of 2026, noted that municipal finances continue to present one of the most significant risks within South Africa’s public-sector credit landscape.
“The City of Johannesburg became the focal point of investor attention during the period. In March 2026, the JSE temporarily suspended trading in the city’s listed debt after it failed to publish its FY25 audited financial statements within the required timeframe,” it said.
“Although the city subsequently released its financial statements and successfully settled its R1.44bn COJ08 bond at maturity in June, concerns remained around governance, transparency and financial sustainability.
“National Treasury publicly described the city’s creditor position as a marker of severe financial distress and warned that its R10.3bn wage agreement could place additional pressure on already constrained finances.”
Business Day
Kabelo Khumalo
www.businessday.co.za