R24 billion flushed down the drain at municipalities across South Africa

South Africa’s municipalities incurred R24.12 billion in fruitless and wasteful expenditure over just a four-year period, between the 2021/22 and 2024/25 financial years.

This was revealed in the Auditor-General of South Africa’s (AGSA) latest Local Government Audit Outcomes report for the 2024/25 financial year.

The figure includes R6.36 billion lost during the 2024/25 financial year alone, with as much as 83% of this stemming from interest and penalties incurred on late payments to suppliers.

This figure could stretch even higher, as 17 municipalities reportedly understated their fruitless and wasteful expenditure in their financial statements for that year.

The AGSA flagged this as highly alarming, pointing to poor consequence management and insufficient investigations for allowing this expenditure to escalate.

“Councils continued to write off rather than investigate and recover unauthorised, irregular, and fruitless and wasteful expenditure,” the AGSA said.

“They disposed of accountability obligations as accounting entries rather than enforcing them as governance requirements.”

By themselves, South Africa’s eight metropolitan municipalities accounted for R4.65 billion, or almost one-fifth, of the total fruitless and wasteful expenditure accrued since 2021/22.

During the 2024/25 financial year alone, fruitless and wasteful expenditure at the country’s metros amounted to R785.29 million, with 49% being attributable to interest and penalties.

The AGSA warned that this had placed financial burdens on these metros, straining their budgets and reducing their capacity for service delivery and infrastructure maintenance.

While most of the metros were able to cover this expenditure through revenue generation, the Buffalo City, Nelson Mandela Bay, and City of Ekurhuleni metros ended the year in a budget deficit.

This is concerning in the AGSA’s eyes, as these eight metros serve approximately 40% of the country’s population, and accounted for 54% of the total local government expenditure budget in 2024/25.

“Metros and their entities have started paying attention to unauthorised, irregular, and fruitless and wasteful expenditure over the past three years,” the AGSA said.

“But councils and boards have been more inclined to write off the financial losses and the money irregularly spent rather than take steps to address the root causes.”

Questions around where the money went

With the AGSA revealing the staggering amount of money that South Africa’s municipalities have lost in the last four years, concerns have been raised about where the money was spent.

It is important to note that fruitless and wasteful expenditure differs slightly from irregular expenditure in the eyes of the Auditor-General.

While irregular expenditure is any spending which did not comply with legislation, the AGSA said this is not necessarily an indicator that the money was wasted or that fraud took place.

Fruitless and wasteful expenditure, meanwhile, is spending made in vain, which brings no benefit to the municipality and could have been avoided with reasonable steps in place.

The report identified the Free State as the worst province for fruitless and wasteful expenditure, with 5% of the province’s total expenditure budget in 2024/25 being spent in this manner.

Meanwhile, the City of Tshwane metro was singled out as the municipality which accrued the highest fruitless and wasteful expenditure during the last four-year administration, at approximately R3.61 billion.

For example, during its 2021/22 financial year, the metro awarded a R617 million contract to Akhile Consortium to prepare an immovable asset register.

However, the controls in place to monitor and review the contract’s progress were found to be insufficient, resulting in substantial payments made in excess of the value of the work actually performed.

The AGSA flagged this as a material irregularity and notified Tshwane’s accounting officer in April 2023, following which a value-for-money audit was carried out against Akhile.

The audit determined that the consultant had been overpaid for the work done, with legal processes reportedly still ongoing in order to recover the lost funds.

The accounting officer has withheld R12.32 million, which was owed to the consultant, and a High Court summons was issued in May 2025 to recover the remaining R13.76 million.

While this is just one major example, it demonstrates the AGSA’s warning that a lack of proper governance has continued to impede South Africa’s financial stability.