The Western Cape municipalities generated R97 billion in operating revenue for the 2024/25 fiscal year, according to the Provincial Treasury’s 2025 Local Government Budget Performance Overview, released on 15 December 2025, reports Cape {town} Etc.
The report not only highlights the significant economic contributions of local governments but also indicates a collective operating surplus of R3.9 billion, underscoring a cautiously optimistic forecast for the region’s financial health.
The Provincial Treasury has positioned itself as a diligent overseer, collaborating closely with municipalities to manage these substantial funds effectively.
‘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,’ remarked Western Cape Minister of Finance, Deidré Baartman.
She emphasised that such surpluses empower local authorities to reinvest in infrastructure and service delivery and to build reserves for unforeseen challenges.
Among the noteworthy outcomes presented in the report was the achievement of 20 clean municipal audits in the 2023/24 period – representing nearly half of the 41 clean audits recorded nationally.
Additionally, a commendable 27 out of 30 municipalities (90%) adopted fully funded budgets for 2025/26, significantly surpassing the national average of 65.4%.
Capital expenditure also demonstrated impressive growth, reaching R15.06 billion, which constituted 84.6% of adjusted capital budgets for the period. This capital influx reflects ongoing efforts to enhance infrastructure development, especially within critical sectors such as water and sanitation.
Notably, investment in wastewater alone is projected to surge from R724 million in the 2021/22 fiscal year to a remarkable R4.51 billion by 2025/26, facilitating significant advancements in essential service delivery.
Despite these encouraging results, the report does highlight pressing fiscal risks. Several of the major trading services, specifically water, wastewater, and solid waste, continue to operate below full cost recovery.
Additionally, municipalities faced a staggering R24.8 billion in bulk electricity purchases – a 17.7% increase that outpaced tariff adjustments – compounding financial pressures largely dictated by tariffs set by the National Energy Regulator of South Africa (NERSA).
Baartman indicated a commitment from the Western Cape Government to lobby NERSA to harmonise electricity prices with the need for affordability and financial sustainability.
Traffic fine collection also presented challenges, with local municipalities managing to collect only 21.9% of accrued fines in 2024/25. The forthcoming implementation of the Administrative Adjudication of Road Traffic Offences (AARTO) will likely exacerbate revenue constraints, prompting local authorities to seek alternative revenue sources actively.
‘These results reflect the resilience and discipline of our municipalities,’ Baartman asserted.
The full Provincial Treasury’s 2025 Local Government Budget Performance Overview.
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Picture: Deidré Baartman / Facebook
