5th Annual Local Government Conversations - Webinar 6 of 2026

Reforming the Municipal Finance Management Framework

Hosted by: Future Cities Africa and The Municipal Edge

Date: 16 September 2026

Topics: MFMA Reform - Consequence Management - Budget Credibility - Irregular Expenditure - Combined Assurance - Revenue Management - Financial Recovery - Early Intervention

This webinar brought together National Treasury, governance specialists and revenue management practitioners to deliberate on the principles and practical choices that should inform amendments to the Municipal Finance Management Act. Twenty-three years after the MFMA was promulgated, the question is not whether reform is needed - it is whether the system has the institutional will to implement what is already in law, and whether targeted amendments can close the gaps that are still allowing municipal finances to deteriorate.

The core finding

South Africa does not lack legislation. The MFMA, its nine regulations, 133 circulars, and supporting frameworks provide a reasonably complete governance architecture. 53% of municipalities - 132 in total - did not comply with legislative consequence management requirements in 2023/24. That is not a legislative vacuum. It is a majority of municipalities not complying with obligations already in law. The reform question is therefore not what new provisions to write. It is why the ones that already exist do not translate into action - and how targeted amendments can sharpen what is already there.

Speaker contributions

Mr Wayne McComans - Chief Director: MFMA Implementation, National Treasury

Wayne presented National Treasury's formal position on the MFMA amendments - the result of eight years of internal assessment, stakeholder engagement and diagnosis of what has worked and what has not. The bulk of what is in the current legislation remains relevant. The amendments target specific, identified weaknesses.

• The MFMA must become the A to Z of the financial management landscape in local government. Financial management functions currently spread across the Systems Act and the Property Rates Act - and overseen by COGTA rather than Treasury - will be consolidated into the MFMA. This eliminates fragmentation, duplication and inconsistent guidance.
• On funded budgets: Treasury will seek to build a requirement that councils cannot adopt a budget before responding to National Treasury comments - with some level of consensus required on how comments were considered and, where rejected, why. This is the most targeted intervention available to reduce unfunded budgets without removing council's constitutional authority.
• The Public Procurement Act will repeal Chapter 11 of the MFMA. All things procurement will move under one umbrella. Municipal SCM Regulations will follow. The Municipal PPP Regulations are at an advanced stage of amendment and are expected shortly.
• On irregular expenditure: Treasury is considering revising the definition so that a small technical breach does not make an entire contract or transaction irregular. Personal liability for irregular expenditure must attach to the councilor or service provider responsible - not only the official who processed it.
• A Municipal Financial Misconduct Investigation Committee, housed at National Treasury with provincial equivalents, is being proposed to strengthen consequence management with real institutional teeth - not dependent on municipal disciplinary boards that have largely not functioned as intended.
• Councillors who issue unlawful financial instructions may face monetary penalties imposed through the Government Gazette. The intention is that wrongdoing is felt financially - creating a deterrent that does not currently exist.
• Provincial treasuries and MECs of Finance will have significantly strengthened oversight roles - with triggers for intervention when councils adopt unfunded budgets for two consecutive years or incur UIFW in two consecutive years. MECs of Finance will be empowered to trigger intervention earlier, before the municipality is on life support.
• On salary negotiations: a mechanism is being considered whereby the Minister of Finance must concur with proposed salary increases before implementation - to ensure affordability at municipal level is assessed before commitments are made.
• On disputes between auditors and auditees: an interpretational ruling power for the Minister is being considered - making Treasury's view as custodian of the MFMA binding on both sides when disputes cannot be resolved, and providing finality to audits.
• The MFMA amendments are expected to be submitted to Parliament in the 2027/28 financial year. Once the bill is published, public comment will be invited - and Wayne explicitly called on practitioners to engage with it.

"The law provides a skeleton. It is the municipal policies and SOPs that put meat on the skeleton. In many instances, it is those internal policy documents - approved by council - that have turned a simple one-month process into a nine-month process. That is where the culture of compliance has been built."

Ms Yena Khuboni - M&E Specialist and Chairperson: CIGFARO Combined Assurance Committee

Yena focused on a single, sharp argument: consequence management is not short on rules. It is short on the mechanisms that close the loop. Her three proposed moves do not add compliance burdens - they ask existing obligations to do what they already promised.

• The architecture is already in place: Section 32 and Sections 173 to 175 cover disciplinary boards and UIFW; Section 56 and 54A performance agreements bind municipal managers and senior managers; MPACs are council's own oversight mechanism; and the AG's material irregularity process - arguably the sharpest current instrument - allows direct referral for recovery.
• The problem is not the rules. 53% of municipalities are not complying with consequence management obligations already in law. The reform question is why - and what targeted changes can make the mechanism actually bite.
• First move - mandate the coordination: consequence management sits across the accounting officer, audit committee, internal audit, risk management and M and E. No single provision says who is legislatively answerable for pulling those findings into one picture. A combined assurance coordination duty, naming that responsibility explicitly, must be written into the MFMA itself.
• Second move - make it genuinely time-bound: timeframes without automatic escalation triggers are suggestions, not requirements. Statutory timeframes paired with automatic escalation - so that when a deadline passes, something happens by law, not by memo - are the minimum required.
• Third move - widen the evidence base: financial recovery plans are almost entirely cashflow exercises. They should also account for risk financing and insurance capacity, because a recovery plan can be undone overnight by an uninsured shock. Early warning triggers should include outcome and service delivery data, not only compliance ratios - a municipality can be technically compliant in its reporting while the underlying service to residents keeps deteriorating.
• On King V and combined assurance: the MFMA should not import King V wholesale. King V was built for a single governing board in a JSC-listed environment. Local government has a split governance structure - council, mayor, accounting officer and MPAC - governed by delegations under the Systems Act. The amendments should translate King V substance into public-sector-specific duties, pinned to the actual delegation chain, rather than referencing a code that will not attach to anyone in particular.

"If consequence management stays an obligation with no clock and no single owner, this amendment will read well but change very little. Legislate the coordination. Give it a deadline. Those two things together turn a good instrument into one that actually bites."

Ms Mirriam Sunda - Chief Audit Executive and CIGFARO Board Member

Mirriam spoke from the Chief Audit Executive perspective - focusing on what integrated, automated systems and genuine combined assurance can deliver where fragmented, silo-based oversight has failed.

• The MFMA requires sound and sustainable management of municipal financial affairs - which depends on reliable controls and timely decision-making. Combined assurance can provide the integration mechanism that currently does not exist in practice.
• Governance structures - audit and risk committees, MPACs - are operating in silos, providing different assurances to different structures and hindering decision-making. This is the operational failure that combined assurance is designed to address.
• Real-time reporting will improve data quality and support governance structures - but municipalities must first get their manual processes in order before procuring systems that they cannot integrate. Reliability of information precedes automation.
• Reform without implementation is the sector's consistent failure. The consistent message from three hours of deliberation is that the instruments exist. The challenge is getting officials to take them into practice - and that requires change management, not only legislation.
• The CAE should be the legislated coordinator of combined assurance in local government - with levels of assurance playing a key role and a practical tooling framework (such as that being developed by CIGFARO) providing the operational guide for municipalities to follow.

"Building the future in government starts with trust, transparency and results that we can measure. When we invest in people, technology and accountability, we don't just plan for tomorrow - we build it."

Mr Thuso May - Municipal Finance and Revenue Optimisation Specialist, Ntiyiso

Thuso reframed the revenue conversation around a single shift: from revenue collection as a departmental function to revenue management as an integrated, data-driven, proactive system.

• The traditional question - "we billed two billion, we collected one point five billion, when are we collecting the five hundred million?" - is the wrong question. The right question is: "why did we fail to convert two billion into cash?" That single reframing moves the focus from the end of the value chain to every step within it.
• Revenue management is not a collection problem. It is an integrated problem spanning billing accuracy, meter reading, query management, credit control, debt management and data quality. When these functions operate in silos, each solving its own problem, the system leaks at every junction.
• The intervention must happen before the debt becomes due. By the time debt reaches 60 days, the traditional credit control response kicks in - but the opportunity for proactive intervention has already passed. Data intelligence should be triggering action at the point where a customer has not paid a current bill, not when they have missed three.
• Approximately R400 billion in municipal consumer debt exists in the system. Much of it has reached a point where recovery through conventional means is extremely difficult. The sector cannot write off these balances and restart - it must find segmented, data-informed strategies for each category of debtor, including negotiated instalment arrangements rather than blanket approaches that do not reflect the actual capacity to pay.
• Data must move from reporting to planning. Dashboards that tell you what happened are useful. Data that allows you to understand which geographic areas are not paying, which customer categories, and which parts of the billing chain are failing - and then to adjust policy, credit control strategy and collection approaches accordingly - is what produces sustainable revenue improvement.
• AI integration is the next step - but only when the underlying data is understood, interpreted and trusted. Garbage data into an AI system produces garbage decisions at scale.

"Revenue should be treated as a system, not a department. When we focus on a department, we get an office in a building. When we treat it as a system, we get a vehicle that everyone must drive together."

Key takeaways for practitioners

1. Engage with the MFMA bill when it is published. National Treasury has explicitly invited public comment. Practitioners who have lived with the consequences of the current framework have the most relevant input to offer.
2. Do not wait for the bill. Several panelists identified changes municipalities can make now: putting outcome data alongside audit findings in the same meeting; adding the question "what changed for residents?" to every performance session; and treating consequence management as triggered by service delivery failure, not only financial irregularity.
3. The consequence management architecture already exists. Section 32, Section 56 performance agreements, MPACs, and the AG's material irregularity process are all in place. The reform question is not what new tools to add - it is why the existing ones are not being used, and how statutory timeframes and automatic escalation can make them work.
4. Combined assurance must have a named owner and a clock. Without legislative assignment of the coordination responsibility and a timeframe that triggers automatic escalation, combined assurance will remain an aspiration rather than an accountability mechanism.
5. Revenue management is a system, not a department. Integrating billing, metering, query management, credit control and debt management into one connected value chain - with data intelligence enabling proactive intervention rather than reactive collection - is the reform that addresses the R400 billion consumer debt crisis at its root.
6. Internal policies may be the hidden compliance problem. Treasury's assessment found that municipal policies and SOPs have in many cases transformed simple processes into nine-month journeys. Review your own policy environment before blaming the legislation.
7. Real-time data credibility is the prerequisite for real-time reporting. Treasury is receiving data through monitoring systems that is then disputed by the municipalities that submitted it. Fix the credibility of data at source before investing in dashboards and automation.