Households account for the bulk of outstanding debt, owing R299.5bn—or 72% of the total consumer debt of R416.1bn—as at 31 March 2025. This reflects an increase from R253.6bn and R347.6bn respectively in the same period of 2023/24.
The report, which covers 257 municipalities, also reveals that government departments owe 6% of the total, or R24.9bn—up from R21bn a year ago.
On the other side of the ledger, total outstanding creditors owed by municipalities have risen to R131.8bn, from R106.7bn in the previous year. Alarmingly, 84.8% of this amount—R111.8bn—has been overdue for more than 90 days, pointing to growing liquidity constraints.
Provinces with the highest percentage of outstanding municipal creditors in the category greater than 90 days include the Free State at 94.4%, Mpumalanga at 93.9%, the Northern Cape at 93.8%, and the North West at 84.4%.
An increase in outstanding creditors could be an indication that municipalities are experiencing liquidity and cash challenges and consequently are delaying the settlement of outstanding debt owed.
“An analysis of collection rates indicates that while municipalities budgeted for an average collection rate of 85% (adjusted budget), the aggregated actual collection against billed and other revenue was only 63.6%. The metros had budgeted for a collection rate of 87.9% but collected only 58.2%. Secondary cities budgeted for 86.3%, with an actual collection of just 69.7%,” the report stated
Municipal spending
As at 31 March 2025, aggregate spending by municipalities was at 64.9% or R432.2bn of the total adjusted expenditure budget of R665.9bn.
“Aggregated billing and other revenue was 71.7% or R478bn of the total adjusted revenue budget of R666.8bn.
“Capital expenditure was R26.4bn or 33.6% of the adjusted capital budget of R78.5bn.
“The adjusted operating expenditure budget was R587.5bn, of which R405.8bn or 69.1 per cent) was spent by 31 March 2025.”
Municipalities adjusted their salaries and wages budget (including remuneration of councillors) from R162.6bn in the adopted budget to R161.1bn in the adjusted budget for the 2024/25 financial year, representing a decrease of R1.5bn or 0.9%.
The budget for salaries and wages constituted 27.4 % of the total adjusted operating expenditure budget of R587.5bn.
As at 31 March 2025, R114.2bn or 70.9% of the adjusted salary budget was spent.
Conditional grants
As at 31 March 2025, municipalities were allocated R44.7bn for direct conditional grants, of which R38.9bn has been transferred.
This amount excludes the Equitable Share allocation, Urban Settlements Development Grant (USDG) as a supplementary capital allocation to metropolitan municipalities as well as indirect grants.
National Transferring Officers (NTOs) reported spending of R25bn (55.9%), while municipalities reported spending of R19.5bn (43.7%) of the total allocation.
In comparison, during the same period in the previous financial year, NTOs reported 58.8% against the total adjusted allocation for direct conditional grants, while municipalities reported expenditure of 46.8 %.
“There are several factors that attributed to the overall underspending of the conditional grants by municipalities during the 2024/25 financial year. Some of these factors include late submissions of business and implementation plans which hindered timely implementation, while persistent Supply Chain Management (SCM) challenges disrupted procurement processes.
“These issues not only affected grant performance in the third quarter but also led to reduced allocations for many municipalities during the adjustment budget process as uncommitted funds were reallocated to better-performing municipalities.
“The impact of these challenges highlights the need for stronger municipal planning, more efficient SCM systems, and stricter enforcement of procurement regulations to prevent similar underspending in the future.”
Treasury said the third quarter infrastructure grant performance presents a mixed picture, with R23.8bn or 56.3% expended from the R42.8bn allocation.
“While showing moderate overall progress, significant disparities exist between better-performing grants and those facing implementation challenges. While this demonstrates moderate progress, the performance varies considerably across different grants, with some showing effective implementation and others lagging behind.
“While some grants such as the Integrated Urban Development Grant (IUDG), Municipal Infrastructure Grant (MIG) and the Regional Infrastructure Grant (RBIG) demonstrate efficient spending with expenditure over 60% by the end of the third quarter, others like the Municipal Disaster Recovery Grant (MDRG) and the Water Services Infrastructure Grant (WSIG) remain severely underperforming.
“This inconsistency highlights the need for a more balanced approach in grant management, such as rewarding well-performing municipalities with additional support while imposing stricter consequences for chronic underspending. Without urgent corrective measures, critical service delivery backlogs will continue to worsen,” National Treasury said.
