Finance

The Provincial Treasury is actively supporting all municipalities in the Western Cape to
strengthen and improve their financial management and financial good governance. Our
approach is rooted in the Provincial Treasury’s mandate in terms of section 5 of the
Municipal Finance Management Act (“MFMA”, Act 56 of 2003) to monitor compliance
with the standards for financial management and governance set in the Act and to support
municipalities to improve.
(a) The relevant details are as follows:
The Provincial Treasury in collaboration with National Treasury uses various tools to
monitor, assess, analyse and report on municipal finances and financial maturity,
including monthly reports in terms of S71 of the MFMA, the online eMonitor and
GoMuni reporting systems and the Financial Management Capability Maturity Model
(FMCMM). The monthly monitoring reports also allow the province to identify
municipalities at financial risk and to respond accordingly. The FMCMM measures
compliance and performance on a scale of 1 to 6 - levels 1 to 3 measure compliance
whereas levels 4 to 6 measures performance. Provincial Treasury can thus tailor
appropriate responses to municipalities depending on their different levels of governance
maturity. Our medium-term target is to ensure that Western Cape municipalities
progressively improve their FMCMM scores, with particular emphasis on moving
municipalities from level 3 (compliance) to level 4 (performance).
Furthermore, the implementation of the Municipal Standard Chart of Accounts
(mSCOA) is a central pillar of good financial governance. mSCOA standardises
municipal financial transactions across all municipalities, thereby improving
transparency, comparability, and accountability of financial information. Provincial
Treasury continues to provide technical support and capacity building on mSCOA
implementation.
As part of our response, the Provincial Treasury has adopted a Municipal Budget and
Treasury Talent Management Framework which guides its support and capacity building
initiatives. Through this Framework, adopted in March 2025, the Department has been
supporting and providing training to MPACs, Disciplinary Board Committees, Municipal
Councillors and Officials on the requirements of the UIF&W Expenditures Reduction
and Prevention Strategy and Implementation of Consequence Management, specifically
focussing on the 10 municipalities with the highest UIF&W Expenditures. Other capacity
building includes, among others, Risk Champion Training, support to Internal Audit and
Audit Committees.
This formal training is complemented by a network of intergovernmental forums and
platforms including, the Provincial Budget and Governance Forum with Mayoral
Committee Members for Finance, the Chief Financial Officers (CFO) Forum, the
Municipal Accountants Forum, the Chief Risk Officers Forum, the Supply Chain
Management Forum and Smart Procurement Conference and Revenue Management
Masterclass.
Through this integrated and comprehensive approach, the Provincial Treasury assists
poor performing municipalities to first achieve full compliance with the MFMA, then to
move from compliance to performance, ultimately improving their financial management
and governance.
These in-year monitoring mechanisms not only provide compliance data, but also serve
as early warning mechanisms that allow Provincial Treasury to engage municipalities
proactively before risks escalate into full-blown financial difficulty.
(b) With respect to the timelines, Provincial Treasury aligns its support to municipalities
with the annual accountability cycle of municipalities. Highlights of this include:
• Strategic Integrated Municipal Engagements provide analysis and
recommendations on municipalities tabled budgets, with changes proposed that
they can incorporate in their adopted budgets.
• Technical Integrated Municipal Engagements offer a review of municipal
governance maturity, with recommendations timed to allow municipalities to
make improvements before the audit process begins.
• The Annual Financial Statements Consistency workshop also assists
municipalities to improve the quality of their annual financial statements - we are
proud that this initiative started by the Western Cape has now been picked up by
National Treasury and has been rolled out nationwide.
We are pleased to also note the significant progress that our municipalities have made in
the budgets they adopted for the current financial year. Whereas in 2024/25 six
municipalities adopted unfunded budgets, in the current financial year, only three
municipalities adopted unfunded budgets. This major improvement reflects the hard
work municipalities have done, supported by the Provincial Treasury, in implementing
their Budget Funding Plans. The three municipalities that still have unfunded budgets are
all in financial crisis and the province has formally intervened in them in terms of S139(5)
of the Constitution and all three of them now have Financial Recovery Plans prepared by
National Treasury that, if diligently implemented by the municipality, under the oversight
of the province, will allow their financial recovery in a period of 3 to 5 years.