Cape Town: As of 31 March 2025, total consumer debt owed to municipalities amounted to R416.1 billion, up from R347.6 billion reported in the same period in the 2023/24 financial year.
According to South African Government News Agency, a report released by National Treasury on local government revenue and expenditure for the third quarter of the 2024/25 financial year provides these insights.
‘A total amount of R10.8 billion or 2.6% has been written off as bad debt. The largest component of this debt relates to households and represents 72% or R299.5 billion (73% or R253.6 billion in the same period in 2023/24 financial year),’ National Treasury said on Wednesday. The third quarter publication covers 257 municipalities on financial information and conditional grant information.
The government debt accounts for 6% or R24.9 billion (R21 billion reported in the same period in 2023/24) of the total outstanding debtors. Total outstanding creditors owed by municipalities as at 31 March 2025 amount to R131.8 bil
lion, an increase from R106.7 billion reported in the same quarter in 2023/24. R111.8 billion or 84.8% has been outstanding for more than 90 days, said Treasury.
Provinces with the highest percentage of outstanding municipal creditors in the category greater than 90 days include the Free State at 94.4%, Mpumalanga at 93.9%, the Northern Cape at 93.8%, and the North West at 84.4%. An increase in outstanding creditors could be an indication that municipalities are experiencing liquidity and cash challenges and consequently are delaying the settlement of outstanding debt owed.
Analysis of the collection rates indicates that while municipalities’ average collection rate on the adjusted budget is 85%, the aggregated actual collection against billed and other revenue is only 63.6 percent. The metros budgeted (adjusted budget) for a 87.9% collection rate and collected only 58.2%. The secondary cities budgeted billing was 86.3% and the actual collection was 69.7%, it explained.
As at 31 March 2025, aggregate spend
ing by municipalities was at 64.9% or R432.2 billion of the total adjusted expenditure budget of R665.9 billion. Aggregated billing and other revenue was 71.7% or R478 billion of the total adjusted revenue budget of R666.8 billion. Capital expenditure was R26.4 billion or 33.6% of the adjusted capital budget of R78.5 billion.
The adjusted operating expenditure budget was R587.5 billion, of which R405.8 billion or 69.1% was spent by 31 March 2025. Municipalities adjusted their salaries and wages (including remuneration of Councillors) budget from R162.6 billion in the adopted budget to R161.1 billion in the adjusted budget for the 2024/25 financial year, representing a R1.5 billion or a 0.9% decrease. The budget for salaries and wages constituted 27.4% of the total adjusted operating expenditure budget of R587.5 billion. As at 31 March 2025, R114.2 billion or 70.9% of the adjusted salary budget was spent.
As at 31 March 2025, municipalities were allocated R44.7 billion for direct conditional grants, of which
R38.9 billion has been transferred. This amount excludes the Equitable Share allocation, Urban Settlements Development Grant (USDG) as a supplementary capital allocation to metropolitan municipalities as well as indirect grants. National Transferring Officers (NTOs) reported spending of R25 billion, or 55.9%, while municipalities reported spending of R19.5 billion or 43.7% of the total allocation.
In comparison, during the same period in the previous financial year, NTOs reported 58.8% against the total adjusted allocation for direct conditional grants, while municipalities reported expenditure of 46.8%. There are several factors that attributed to the overall underspending of the conditional grants by municipalities during the 2024/25 financial year. Some of these factors include late submissions of business and implementation plans which hindered timely implementation, while persistent Supply Chain Management (SCM) challenges disrupted procurement processes.
These issues not only affected grant performanc
e in the third quarter but also led to reduced allocations for many municipalities during the adjustment budget process as uncommitted funds were reallocated to better-performing municipalities. The impact of these challenges highlights the need for stronger municipal planning, more efficient SCM systems, and stricter enforcement of procurement regulations to prevent similar underspending in the future.
Treasury said the third quarter infrastructure grant performance presents a mixed picture, with R23.8 billion or 56.3% expended from the R42.8 billion allocation. While showing moderate overall progress, significant disparities exist between better-performing grants and those facing implementation challenges. While some grants such as the Integrated Urban Development Grant (IUDG), Municipal Infrastructure Grant (MIG) and the Regional Infrastructure Grant (RBIG) demonstrate efficient spending with expenditure over 60% by the end of the third quarter, others like the Municipal Disaster Recovery Grant (MDRG) and
the Water Services Infrastructure Grant (WSIG) remain severely underperforming.
This inconsistency highlights the need for a more balanced approach in grant management, such as rewarding well-performing municipalities with additional support while imposing stricter consequences for chronic underspending. Without urgent corrective measures, critical service delivery backlogs will continue to worsen, National Treasury said.
Further details on this report can be accessed on the National Treasury’s website: www.treasury.gov.za.