Western Cape Municipalities and Midvaal Emerge as the Most Stable Regions

It’s not surprising that the performance of South African municipalities is generally subpar, but can it possibly decline even further?

Yes, it can – and according to the latest Ratings Afrika Municipal Financial Sustainability Index (MFSI), it already has.

An in-depth look at South Africa’s best-managed municipality

“The results of the recent MFSI once again emphasize the critically weak financial sustainability of South African municipalities under the leadership of current elected councillors and their appointed executive teams,” notes Ratings Afrika, a governance rating agency.

“Exceptions exist among many municipalities in the Western Cape and Midvaal in Gauteng. Ratings Afrika has been raising concerns about this troubling trend since 2011.”

Residents and businesses are increasingly burdened by inadequate, and in some cases, almost nonexistent service delivery.

The average score among the 107 municipalities assessed is alarmingly low at just 36 out of 100.

This score has plateaued over the last two years and is ironically propped up by the relatively strong performance of the Western Cape, which averages 55 out of 100.

Read: Auditor-General’s initiative against waste and corruption results in R4.5bn savings

The index measures financial sustainability on a scale of zero to 100, focusing on six critical components: operating performance, liquidity management, debt governance, budgeting practices, affordability, and municipal infrastructure development.

Common traits among the best

While not explicitly stated in the report, the Western Cape is predominantly led by the Democratic Alliance, as is Midvaal in Gauteng.

The DA’s political image has benefited from assessments by Ratings Afrika and the Auditor-General SA, showing a distinct contrast between it and other local government parties. This may encourage former Cape Town mayor Helen Zille to consider a run for mayor of Joburg in 2026.

The Western Cape stands out as the highest-scoring province and the only one classified as financially sustainable, according to Ratings Afrika.

Top 10 municipalities
Saldanha Bay	Western Cape
Swartland	Western Cape
Swellendam	Western Cape
Hessequa	Western Cape
Midvaal	Gauteng
Mossel Bay	Western Cape
Stellenbosch	Western Cape
Prince Albert	Western Cape
Overstrand	Western Cape
Drakenstein	Western Cape
Source: Ratings Afrika

When excluding the municipalities in the Western Cape, the average score for the rest of the country drops to 30 out of 100, a decrease from 32 in 2023.

Common traits among the lowest

A significant issue among the municipalities with the poorest scores is their weak liquidity positions, where there is a substantial mismatch between operating revenue and expenditures, leading to noteworthy operating deficits.

“Their infrastructure is deteriorating, primarily due to inadequate spending on repairs and maintenance, which could threaten long-term service delivery and sustainability. The ongoing viability of these municipalities is highly in doubt.”

Metros are encountering challenges

The average score for metros shows a slight decrease, from 43 in 2023 to 42 in 2024.

At this level of financial sustainability, most metros, except for Cape Town, raise significant concerns according to the report.

Any deficiencies in service delivery within these cities can inflict significant harm on the overall South African economy.

Cape Town is notable as the only metro still considered financially sustainable in 2024, achieving a score of 70, significantly outpacing other metros.

“Its accomplishment is remarkable, especially when the average metro score stands at only 42 in 2024,” comments Ratings Afrika.

Cape Town’s high rating is supported by a strong operating surplus and substantial cash reserves, providing a buffer against financial setbacks. Nelson Mandela Bay, scoring 50, is the only other metro demonstrating any signs of adequate financial health.

New municipal recognition

Amidst the challenges, there is some positive news.

Ratings Afrika, in collaboration with the South African Property Owners Association (Sapoa) and the Banking Association of South Africa (Basa), launched the Sapoa/Ratings Afrika Municipal Performance Award, with Saldanha Bay and Swartland municipalities sharing first place, each achieving a score of 74 out of 100, followed closely by Swellendam at 73 and Hessequa at 72.

Read: Sapoa launches South Africa’s first national municipal performance awards

These ratings stem from consistent performance evaluated over five years. Each municipality has well-defined financial policies and budgets built on solid long-term financial strategies.

The disappointing performance of the majority of municipalities continues to be a pressing concern, significantly affecting residents’ quality of life.

Without a coordinated effort—from the municipalities themselves, the provinces, and the national government—to improve governance and financial management, this disheartening reality will linger, cautions Ratings Afrika.

“Service delivery will further decline, the quality of life for most citizens will deteriorate, and economic activities will be hindered. Immediate action is essential!”

Read: Have municipalities gone beyond the peak of the Laffer curve?

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