Western Cape municipalities generated R97 billion in operating revenue in 2024/25

Western Cape municipalities generated R97 billion in operating revenue in 2024/25 and delivered a collective operating surplus of R3.9 billion. This is outlined in the Provincial Treasury’s 2025 Local Government Budget Performance Overview, an annual report assessing the financial health and management of Western Cape local governments.

Operating revenue and surpluses are not idle funds; they are crucial resources to ensure that municipalities operate effectively and deliver services that residents rely on. The Provincial Treasury, in its oversight capacity, works closely with municipalities to ensure that these funds are managed responsibly and directed towards the areas where they are needed most.

Western Cape Minister of Finance, Deidré Baartman, said, “While Western Cape municipalities recorded a collective operating surplus in 2024/25, municipal councils are required to manage surpluses responsibly to ensure long-term financial sustainability. Operating surpluses enable municipalities to reinvest in infrastructure and service delivery, meet existing obligations and loan commitments, maintain healthy liquidity ratios, and build reserves to respond to unforeseen and unavoidable events.”

The Western Cape Government continues to exercise strong oversight and provide support to municipalities to ensure that operating surpluses are managed responsibly and translated into better services and economic growth for residents. 

Other outcomes outlined in the report include:

• Clean audits: The Western Cape recorded 20 clean municipal audits in 2023/24, nearly half of the 41 clean audits nationally. 17 municipalities maintained clean audits for four or more consecutive years.
• Funded budgets: 27 Western Cape municipalities (90%) adopted fully funded budgets for 2025/26, well above the national average of 65.4%.
• Capital delivery: Capital expenditure reached R15.06 billion, achieving 84.6% of adjusted capital budgets.
• Debt and liquidity: Aggregate municipal debt in the Western Cape declined by 5.3%, from R15.23 billion to R14.42 billion, while cash holdings increased to R25.2 billion.
• Infrastructure investment: Borrowing increased by 96.9% to R6.43 billion, enabling municipalities to accelerate infrastructure delivery. Particularly in relation to water and sanitation, where wastewater investment is projected to rise from R724 million in 2021/22 to R4.51 billion by 2025/26.
• Revenue mix and collection: Service charges remain the largest revenue source, accounting for about half of total municipal revenue. While collection performance is strong in many municipalities, 15 of the 25 municipalities responsible for core revenue functions recorded collection rates below the National Treasury norm of 95%, mirroring broader national challenges.

There are however emerging fiscal risks. Despite the strong overall performance in municipal financial management across the province, three of the four major trading services; water, wastewater and solid waste, continue to operate below full cost recovery. 

Rising bulk electricity costs remain a key pressure point, with municipalities spending R24.8 billion on bulk electricity purchases, a 17.7% increase that exceeded tariff adjustments. Bulk electricity price increases are largely driven by tariffs approved by NERSA and are therefore not within the direct control of municipalities. The Western Cape Government will continue to lobby NERSA to ensure electricity price determinations balance financial sustainability with affordability, particularly for households.

In addition, traffic fine collection remains weak, with municipalities collecting only 21.9% of accrued traffic fines in 2024/25. The implementation of AARTO will further reduce this revenue stream for municipalities, increasing pressure on alternative revenue sources.

“These results reflect the resilience and discipline of our municipalities. The Provincial Treasury will continue to work closely with local governments to perform oversight of municipal finances to ensure that funds are managed responsibly and in the best interests of residents. Strong governance, clean audits and credible budgets are the foundations for investment, economic growth, and job creation,” Minister Baartman concluded.

Read the full report Provincial Treasury’s 2025 Local Government Budget Performance Overview here: [FINAL] 2025 LG Budget Performance Overview - 12 December 2025