The JB Marks Municipality is one of 62 local municipalities nationwide who are in financial distress according to the consolidated Auditor General Report for the 2024/2025 financial year that was release on June 24.

According to the Auditor General of South Africa, Tsakani Maluleke, the JB Marks Local Municipality had been in a concerning financial position for the past two financial years (2023/24 and 2024/25).

On aggregate, unauthorized, irregular, fruitless and wasteful expenditure had amounted to over R 1.2 billion over the course of two years.

The AG report also focused 27 instances related to the supply and delivery of mini substations; investigation of unauthorised, irregular, and fruitless and wasteful expenditure as well as security services that were not provided due to inadequate storage controls.

Another concerning finding was that the Municipal Manager and Chief Financial Officer appointed Management Consultants with the payment of R 34 million to perform MFMA and Municipal Finance Work Outputs and the compilation of the 2024/25 Annual Financial Statements.

The problematic issues of revenue collection were also pointed to in the AG Report.

“At JB Marks, we notified the accounting officer of an MI in December 2025 after the municipality had failed to take reasonable measures to collect revenue owed by customers.”

The JB Marks Municipality approved the budget for 2026/27, despite concerns from opposition parties in Council. One of the reasons for optimism according to JB Marks Executive Mayor, Gaba Thithiba Ka Qhele was the municipality had achieved the first unqualified audit since 2016. This though does not paints the full picture of the expenditure issues that have plagued the local municipality.

The Auditor General was frank in her assessment of the importance of functioning local municipalities.

“Local government requires fundamental and far-reaching reform, driven by capable, collaborative and ethical leaders that are committed to building municipalities characterised by sustained institutional performance, accountable leadership and officials, transparent systems and processes as well as strong institutional integrity.”

“The legislative framework clearly defines the respective responsibilities of mayors, councils and executive authorities. However, what remains insufficient is the consistent, diligent and effective execution of these responsibilities,” stated Maluleke.

A national problem

Since 2021-22, municipalities and their municipal entities have incurred irregular expenditure of R145,21 billion; R40,14 billion was incurred in 2024-25 alone. Non-compliance with procurement and contract management legislation was the reason for 87% of this total.

How this is determined and calculated

• As detailed in subsection 1.2, the MFMA requires accounting officers to prepare monthly budget statements and a mid-year budget and performance assessment.
• If these financial reports show that the municipality is experiencing serious financial problems, the accounting officer and mayor are required to alert the council and take appropriate action to address the problems
• A financial recovery plan, revenue enhancement strategy or similar plan needs to be implemented.
• The accounting standards also require municipalities to perform an assessment of their financial position to identify financial problems that can impact their ability to continue operations and deliver services
• It further requires an assessment of whether the plans that are in place will effectively and timeously address the identified financial problems. If such an outcome is unlikely, this material uncertainty must be disclosed in the municipality’s financial statements to ensure transparency on its financial state to those that provide financing and funding to the municipality (for example, banks, creditors and donors) as well as to the council, public and the national and relevant provincial government.
• The AG General in her reports, determines whether a going concern uncertainty should be disclosed by reviewing the municipality’s assessment and plans and by performing a financial health assessment.
• The assessment involves calculating and considering financial indicators using information from the financial statements. The indicators are those typically used to assess financial performance and sustainability, and include the indicators used by the National Treasury to determine whether a municipality is in financial distress.