The National Treasury's Bold Move Against Municipal Waste

South Africa's National Treasury has launched a significant crackdown on municipal mismanagement, targeting a staggering R151 billion in unauthorised, irregular, fruitless, and wasteful expenditure across the country's 257 municipalities. This initiative marks a turning point in the battle against financial impropriety at the local government level, where years of lax oversight have drained public resources meant for essential services like water, electricity, and road maintenance. By enforcing stricter accountability measures, the Treasury aims to recover losses and prevent future abuses, signaling that no one is above the law when it comes to handling taxpayer money.

The announcement comes amid growing public frustration with deteriorating service delivery. Residents in many areas face intermittent power cuts, uncollected rubbish piling up on streets, and burst pipes leaving communities without water for days. These everyday struggles are not just inconveniences; they stem directly from funds being squandered on non-compliant contracts, overpayments, and ghost projects that deliver nothing tangible.

Defining the Scope of Municipal Financial Mismanagement

To grasp the magnitude of this crisis, it's essential to understand the four categories of problematic spending encapsulated in the acronym UIFW—unauthorised, irregular, fruitless, and wasteful expenditure. Unauthorised expenditure occurs when a municipality overspends its approved budget without permission, essentially spending money it doesn't have allocated. Irregular expenditure arises from transactions that don't comply with supply chain management regulations, such as awarding contracts without proper tenders or to connected individuals.

Fruitless and wasteful expenditure refers to payments that yield no value, like interest on late supplier payments or legal fees from avoidable disputes caused by poor administration. According to recent audits, the breakdown reveals the dominance of irregular spending at approximately R137 billion, followed by R8.5 billion in unauthorised outlays and R5.27 billion in fruitless and wasteful categories. This classification, rooted in the Municipal Finance Management Act (MFMA), underscores how systemic failures in procurement and budgeting have compounded over time.

Unpacking the R151 Billion Scandal

The R151 billion figure represents a cumulative burden from recent financial years, highlighting a pattern of escalating losses. Auditor-General Tsakani Maluleke has been vocal about the need for recovery, noting that municipalities can no longer merely disclose these amounts in annual reports—they must pursue those responsible. This total equates to enough money to build thousands of schools or clinics, or to fix crumbling infrastructure nationwide.

Step-by-step, the process of incurring UIFW typically begins with flawed procurement: a municipal official bypasses competitive bidding, awards a contract to a favored supplier, and pays for substandard or undelivered work. Audits then flag it, but recovery stalls due to political interference or lack of will. The Treasury's intervention disrupts this cycle by mandating personal liability under Section 32 of the MFMA, which holds accounting officers, councillors, and managers accountable for deliberate or negligent actions.

In practical terms, this means officials could face salary deductions, civil lawsuits, or even criminal charges. The updated MFMA circular reinforces this by requiring detailed investigations into each instance, moving beyond paperwork to actual asset freezes or prosecutions.

Case Studies: Municipalities in the Spotlight

While the crisis affects all 257 municipalities, certain hotspots exemplify the rot. The City of Tshwane recently exposed R14.4 billion in wasteful spending, leading to arrests of five officials and disciplinary action against 349 others. Investigations revealed overpayments for incomplete roadworks and inflated consultant fees.

eThekwini Municipality, governing Durban, wrote off R1.1 billion in irregular expenditure last year, much of it tied to emergency procurement during floods that lacked oversight. Meanwhile, Matlosana Local Municipality in the North West racked up over R11 billion in UIFW in the 2024/25 financial year alone, primarily from unauthorised budget overruns on water projects that remain unfinished.

Metros like Johannesburg and Ekurhuleni also feature prominently, with Johannesburg's DA caucus vowing to open criminal dockets under Section 173 of the MFMA for financial misconduct amid an 'accountability crisis' under coalition governance. These examples illustrate a common thread: political patronage overriding financial controls, resulting in billions lost annually.

Auditor-General's Push for Accountability

Tsakani Maluleke, South Africa's Auditor-General, has positioned herself as a key architect of reform. Her office's audits expose not just the quantum but the human cost: communities deprived of services while officials evade consequences. Maluleke insists that recovery must start now, with municipalities identifying culprits and instituting deductions from salaries or pensions. Her reports provide the evidentiary backbone for Treasury actions, ensuring data-driven enforcement.

This stance aligns with broader government efforts, including the Special Investigating Unit's probes into municipal corruption, which have gained momentum in Parliament.

Treasury's Stricter Oversight Toolkit

At the core of the crackdown is Section 32 of the MFMA, which Treasury is vigorously enforcing through a new circular. This provision creates statutory liability parallel to criminal and labor laws, allowing for swift recovery without lengthy court battles. Municipalities must now:

• Conduct thorough investigations into every UIFW instance.
• Identify responsible parties, from mayors to chief financial officers.
• Initiate recovery via payroll deductions or civil claims.
• Report progress quarterly to Treasury.

Complementing this, Treasury withheld equitable share allocations—vital unconditional grants—from 75 dysfunctional municipalities in late 2025. These councils, owing billions to Eskom and water boards, faced payment freezes until compliance proofs were submitted. While SALGA protested, the move prompted R278 million in repayments, proving its efficacy.

Service Delivery: The Human Cost of Waste

Mismanagement's ripple effects manifest in service delivery protests erupting nationwide. Treasury's recent report highlighted R8.66 billion in water losses across metros due to leaks and theft—funds that could have repaired aging pipes. Eskom debts exceed R70 billion, exacerbating load-shedding in indebted areas.

In Govan Mbeki, unfunded budgets crippled waste collection, leading to health hazards. Similarly, North West municipalities like Matlosana see roads potholed and lights unlit, fueling unemployment as businesses flee unreliable infrastructure. This vicious cycle—waste leading to poor services, eroding revenue, breeding more waste—demands urgent intervention.

Stakeholder Perspectives and Political Heat

Opposition parties like the DA hail the measures as long overdue, pledging prosecutions in Joburg. ANC-led councils decry them as punitive, arguing for capacity-building over cuts. Experts from the South African Local Government Association (SALGA) call for balanced support, while civil groups like Public Interest SA demand criminal referrals for fraud-concealed UIFW.

Citizens on social media echo outrage, with trending posts questioning why billions vanish while tariffs rise. Economists warn that unchecked waste hampers GDP growth, estimating a 1-2% drag from local gov inefficiencies.

Challenges in Recovery and Enforcement

Despite resolve, hurdles abound: political protectionism shields officials, investigations drag due to under-resourced audit committees, and recovered amounts remain low—less than 20% historically. Treasury counters with mandatory disciplinary boards and SIU collaboration.

• Benefits of enforcement: Deters future abuses, frees funds for services.
• Risks: Short-term disruptions if withholdings hit vulnerable poor.
• Comparisons: Similar to national PFMA successes where recoveries topped R1 billion.

Future Outlook: Reforms on the Horizon

Looking ahead, Budget 2026 allocates R200+ billion to local government, conditional on UIFW reductions. Proposed amendments to the MFMA aim for real-time monitoring via digital platforms. District-wide interventions, like in North West, show promise, with turnaround teams slashing irregular spend by 30%.

Sustained pressure could restore trust, boosting property rates and investment. Yet, without ethical leadership, the cycle persists.

Actionable Insights for Citizens and Leaders

Residents can engage via ward committees, demand AG report briefings at councils, and vote for accountable governance. Leaders must prioritize skills training for officials and transparent SCM. Ultimately, this crackdown offers a pathway to fiscal health, ensuring every rand serves South Africans.

Photo by Hennie Stander on Unsplash