South African municipalities spent R1.61 billion on external financial reporting consultants during the 2024/25 financial year [1].

This spending highlights a systemic failure in local governance, where public funds are diverted to third-party firms without resolving the core administrative collapses that necessitate such help.

The Auditor-General said that the reliance on these consultants has not yielded meaningful improvements in accountability or governance [1], [2]. While municipalities hire these experts to address challenges in financial reporting and oversight, the underlying problems persist. This creates a cycle of dependency where local governments pay for temporary fixes rather than building internal capacity.

The latest report from the Auditor-General, released in 2026, cautions against complacency within local government [3]. The findings suggest that the presence of consultants often masks a lack of skill or will within the permanent municipal workforce. Consequently, the financial distress of many municipalities continues to deepen despite the significant investment in professional services [1], [2].

Local governments have turned to these consultants to navigate complex reporting requirements and avoid audit failures. However, the Auditor-General said the current approach has not fixed the root causes of financial mismanagement [2], [3]. The spending of R1.61 billion [1] represents a substantial allocation of resources that could otherwise be used for service delivery in struggling communities.

Officials are now facing pressure to move away from this model of external reliance. The goal is to transition toward sustainable internal systems that ensure transparency, and legal compliance without the need for constant outside intervention [2], [3].

“South African municipalities spent R1.61 billion on external financial reporting consultants during the 2024/25 financial year.”

The continued spending on consultants despite poor results indicates a 'capacity gap' in South African local government. When municipalities outsource core functions like financial reporting, they fail to develop the institutional memory and skills needed for long-term stability. This suggests that the crisis in municipal governance is not merely a lack of expertise, but a structural failure to prioritize permanent administrative reform over temporary contractual solutions.