South Africa has just one financially sustainable metro

Among South Africa’s eight metropolitan municipalities, the City of Cape Town is the only one deemed “highly financially sustainable”.

This is according to the latest Municipal Financial Sustainability Index (MFSI) report from Ratings Afrika, assessing financial performance across 128 South African municipalities.

Cape Town received an overall index score of 71 for 2025, almost twice the average score for metros during that year, which was 40.

Ratings Afrika attributed this to its substantial operating surplus and significant cash reserves, which protect the city against financial pressures and allow for greater infrastructure investment.

It also pointed to the city’s revenue collection rate of 98%, above the 95% benchmark for municipal collection and well above the 85.3% average for metropolitan municipalities.

The only other metro regarded as having a relatively fair financial sustainability was Nelson Mandela Bay, although Ratings Afrika noted its declining trend as a point of concern.

Cape Town mayor Geordin Hill-Lewis welcomed the results of the MFSI in a statement and said it affirmed the city’s progress in its numerous investments into infrastructure.

“Good governance enables us to invest an SA-record R40 billion in basic infrastructure over the next three years, while still offering the lowest property rates of SA’s cities,” Hill-Lewis said.

Cape Town’s Rate-In-Rand calculation for 2026/27 is the lowest of South Africa’s metros, with the next lowest Johannesburg still sitting 41% higher.

According to Hill-Lewis, this means that residents of Cape Town are likely to pay less in rates than those of other metros, even as the value of property is much higher.

He also said Cape Town offered the highest rate relief and the greatest benefits for pensioners and indigent households among South Africa’s five largest cities.

“Around 130,000 construction jobs will flow from infrastructure investment in the current term of office alone,” Hill-Lewis said. “75% of infrastructure spending directly benefits lower-income households.”

These infrastructure investments include a R16.7 billion water and sanitation project, equivalent to 40% of Cape Town’s total infrastructure spending over the next three years.

Cape Town’s finances are still not perfect

While Cape Town’s MFSI index score reflected positively on the municipality’s finances, it has not been without its fair share of criticism in recent months.

In the Auditor-General of South Africa’s (AGSA) latest Local Government audit report for 2024/25, Cape Town’s audit opinion was downgraded from clean to unqualified with findings.

This meant that while the metro showed good financial health indicators, the AGSA reported material findings on Cape Town’s compliance with key legislation.

This was the first time the metro had received this audit opinion from the AGSA in four years, having received a clean opinion for three consecutive years previously.

The AGSA’s main point of contention concerned Cape Town’s procurement controls, which it said were particularly weak in terms of sufficient review processes for tender documents.

“Deficiencies in bid specifications, bid evaluations, and supporting documentation reflected weaknesses in institutional discipline and execution,” the AGSA explained.

“Recurring procurement findings indicate that preventative controls and consequence management remain ineffective in preventing non-compliance and irregular expenditure.”

The AGSA noted an award of R3.63 million had been granted to a supplier, in which close family members or business associates of municipal employees held a significant interest.

This award had reportedly not been properly disclosed by the City of Cape Town in its 2024/25 financial statements.

Another key area of concern flagged by the AGSA was its underdelivery on housing, with the metro only achieving 38% of its targets in this category during that year.

Delays affected major Cape Town housing developments, such as the Gugulethu housing project, which was delayed by 15 months and suffered from poor build quality.

The metro was also found to have underinvested in both the repair and maintenance of infrastructure, as well as in asset renewal below depreciation and impairment.

And while Cape Town had the lowest average creditor payment days out of South Africa’s eight metros at 45 days, this was still above the maximum creditor payment time of 30 days.

“The metro should sustain its strong governance foundation while decisively addressing the identified systemic procurement control weaknesses,” the AGSA concluded.

“This will be critical to restoring positive audit momentum and improving service delivery outcomes, particularly in the housing and infrastructure environment.”