Municipalities struggling with MFMA compliance as vacancies, supply chain failures persist

By Thebe Mabanga

South Africa’s municipalities are struggling to comply with the Municipal Finance Management Act (MFMA), with vacancies in senior positions and failures to implement supply chain management policies remaining key challenges, while the balance of frittered public funds continues to rise as municipalities opt for write-offs instead of recoveries.

These are among the findings contained in the MFMA compliance report for the 2024/25 financial year, released by the National Treasury on Wednesday.

Treasury, together with provincial treasuries, is responsible for enforcing the Act.

The compliance report is based on information submitted by municipalities through Treasury’s electronic platform, Muni eMonitor, and the Audit Action Plan, and covers the period from July 1, 2024, to June 30, 2025.

Treasury said the submission rate from municipalities improved to a national average of 88%, although the quality and credibility of the data submitted remained a concern.

Treasury found that 127 municipalities, or 49%, had a System of Delegation (SOD) in place with both delegating and receiving signatories duly appointed.

This was slightly down from 130 municipalities in the previous financial year.

“SODs are crucial for maintaining good governance, financial accountability and effective service delivery,” Treasury said.

The report also found that 84% of critical senior management posts were filled, slightly up from 82% in the 2023/24 financial year, implying a vacancy rate of 16%.

“The highest number of vacancies nationally pertained to the positions of Chief Risk Officers, Chief Audit Executives and Chief Financial Officers,” Treasury said, warning that the trend posed a systemic risk.

A major concern identified in the report relates to failures by municipalities to comply with Supply Chain Management (SCM) policies.

“Municipalities either fail to update their SCM policies to ensure compliance with the latest regulations or have not developed them at all,” Treasury noted.

It added that