Kwazulu-natal: KwaZulu-Natal municipalities have recorded mixed financial performance in the third quarter of the 2025/26 financial year, with signs of stability in revenue collection overshadowed by persistent structural challenges.
According to South African Government News Agency, MEC for Finance Francois Rodgers tabled the Consolidated Municipal Budget Performance Report, revealing that municipalities generated R85.9 billion in operating revenue by the end of March 2026. This figure represents 78.7% of adjusted budgets, surpassing the 75% benchmark expected at the end of the third quarter. However, Rodgers cautioned that the overall figure masks significant disparities between municipalities, with revenue performance heavily concentrated in major urban and non-delegated municipalities. Metro and large local municipalities contribute the overwhelming share of revenue, while many smaller municipalities remain structurally dependent on transfers.
On the expenditure front, municipalities incurred R73.7 billion in operating expenditure, representing 68.9% of their adjusted budgets. This figure falls below the 75% benchmark, and Rodgers warned that underspending often reflects deeper financial management issues rather than efficiency. He highlighted issues such as delayed payments to creditors, incomplete reporting, and system weaknesses as common problems contributing to lower expenditure levels.
Capital spending, crucial for service delivery in areas like sanitation and electrification, remains a concern. Municipalities reported capital revenue of R7.2 billion, which is 46.6% of adjusted budgets, while capital expenditure stood at R7.4 billion, or 47.6%. Rodgers pointed out ongoing weaknesses in infrastructure delivery, including incorrect reporting, delays in project implementation, and cash-flow constraints.
The report also spotlighted growing financial pressure from unpaid municipal bills, with total outstanding debtors rising to R74.3 billion. Households account for the majority of this debt, followed by commercial users and organs of state. Rodgers emphasized the importance of maintaining credible indigent registers and improving billing accuracy to address this issue.
Additionally, municipalities reduced creditor debt to R9.2 billion, though much of it remains unpaid beyond the legally required 30-day period. Bulk electricity and water accounts continue to dominate unpaid obligations, posing risks to service delivery.
Spending of conditional grants also lagged, with municipalities utilizing only 62.5% of allocated funds by the end of the quarter. Twenty municipalities have been flagged as facing serious financial challenges, with six already receiving support under Section 154 of the Constitution. Despite these interventions, Rodgers stressed the importance of stronger governance and accountability at the municipal level, warning that political interference and lack of consequence management can undermine efforts to improve financial performance.
