South Africa’s democratic experiment hinges on whether local government can actually work. Municipalities deliver water, electricity, sanitation, and roads—the basics that determine whether businesses can operate and whether people can live with dignity.
Right now, most cannot do this job. Out of 257 municipalities nationwide, the majority are drowning in financial chaos, institutional collapse, and outright failure to provide services.
Public money—paid by residents through rates and allocated from national coffers—gets squandered through procurement disasters, abandoned projects, and decisions that defy basic financial sense.
When municipalities fail, the consequences ripple outward brutally. Residents and businesses deal with constant disruptions that tank economic activity, destroy jobs, and fuel social tension.
Understanding which municipalities actually succeed, and how they manage it, matters tremendously for investors hunting for stable ground, policymakers searching for replicable models, and citizens simply trying to find somewhere that works.
This report identifies the top performers for 2025 using rigorous financial sustainability benchmarks and governance standards.
These municipalities function as proof that excellence is possible. They maintain robust financial health, practice disciplined budgeting, and run clean administrations. The goal here is dissecting the governance models behind their success and extracting lessons that could work elsewhere.
What emerges from the data is troubling: South Africa now operates as a two-tiered system. Good governance pulls in investors and skilled professionals while keeping social unrest at bay.
Meanwhile, widespread municipal failure drives “semigration”—people and capital fleeing dysfunction for better-run areas—which further crushes financially weak municipalities.
The best performers are not just surviving. They are deliberately building fiscal reserves and infrastructure resilience to insulate themselves from national crises like the persistent energy and water disasters.
1. Saldanha Bay (MFSI Score: 74 out of 100) and 2. Swartland (MFSI Score: 74 out of 100)
These two West Coast localities share the highest score in the Municipal Financial Sustainability Index, tying for top-performing local municipalities in the country. This joint success signals a synthesis of superior financial management and high-quality service delivery—essential components of a stable economic environment.
The stability of Saldanha Bay and Swartland supports significant regional infrastructure projects that enhance economic corridors. The R640 million Malmesbury Bypass project, situated in the Swartland area, forms a critical component of the regional freight route linking the logistics hub of Saldanha Bay to major inter-regional transport routes. These upgrades enhance safety, reduce travel times, and bolster economic activity, demonstrating how municipal financial stability directly drives strategic regional economic goals.
Saldanha Bay is also committed to digital leadership, driving an open-access fibre infrastructure rollout known as Project Baobab to enhance quality of life for residents and advance “Smart City” goals. This innovative approach demonstrates a municipality leveraging its financial health to embrace technological advancement.
3. Swellendam (MFSI Score: 73 out of 100)
Swellendam has been recognized for strong operational performance and recently improved its audit status to achieve a clean audit outcome. This reflects sustained excellence in financial management.
Swellendam’s commitment to financial discipline is evidenced by its exceptional collection rate, which has consistently exceeded 98 percent in recent years despite tough national economic conditions. This high rate is maintained through strict credit control measures coupled with improvements in service delivery standards, demonstrating a powerful correlation between quality services and resident willingness to pay.
The municipality emphasizes the infrastructure pillar of the MFSI. It has allocated capital funding totaling R46.2 million in its budget review towards basic services and, critically, addressing maintenance backlogs. This forward-thinking approach to asset management is essential for long-term municipal sustainability. Swellendam benefits from strong revenue collection, which funds necessary maintenance while keeping services affordable. The municipality couples strict credit control with tangible service improvements, creating a virtuous cycle where residents see value in paying their bills.
4. Hessequa (MFSI Score: 72 out of 100)
Hessequa’s high MFSI score ties specifically to its excellence in the affordability criterion, meaning it successfully balances robust service provision with manageable rates and tariffs for residents.
In terms of governance, the municipality emphasizes strong community inclusion. It utilizes newly elected ward committee structures to ensure residents are actively integrated into municipal processes, enabling clear communication and fostering responsiveness to public needs.
Hessequa is also proactive in building resilience, participating in the provincial drive for energy security with a 10 MW solar photovoltaic project underway in Riversdale aimed at achieving load-shedding independence.
Affordability extends beyond low tariffs to include reliable service delivery—Hessequa residents pay reasonable rates and receive consistent services in return, which reduces the real cost of living.
5. Mossel Bay
Mossel Bay is specifically praised for its mastery of liquidity management and prudent debt governance. The municipality maintains strong cash reserves, enabling it to absorb financial shocks without requiring external bailouts, thereby protecting essential service delivery.
A key marker of its financial foresight is its long-standing focus on infrastructure maintenance. Mossel Bay’s management has historically demonstrated commitment to budgeting for proper upkeep of Property, Plant, and Equipment, recognizing that preventative maintenance is far more cost-effective than managing crisis backlogs.
This disciplined approach to asset management ensures the longevity and reliability of public infrastructure. Strong liquidity means Mossel Bay pays creditors on time, which builds supplier confidence and often secures better pricing on contracts. The municipality avoids the vicious cycle plaguing dysfunctional municipalities where unpaid suppliers inflate prices to offset risk.
6. Overstrand
Overstrand is recognized for robust budget practices and consistent financial performance. This fiscal consistency ensures disciplined and forward-looking allocation of resources. The effectiveness of its governance is reflected in the consistent functionality of critical oversight structures, such as regular ward committee meetings.
The municipality’s reliability allows it to participate in key provincial financing initiatives designed to develop complex infrastructure projects and transition them from feasibility study to bankability, reflecting external confidence in its ability to execute large-scale plans. Overstrand’s budget reliability makes multi-year planning feasible—contractors trust payment schedules, which reduces project costs and attracts better bidders for municipal tenders.
7. City of Cape Town (Best Metro)
The City of Cape Town is consistently recognized as the Best Metro in South Africa, being the only metropolitan municipality considered financially sustainable. Its superior operational performance and strong financial viability set it apart from all other metros.
Cape Town’s financial strength is affirmed by its credit ratings. In May 2025, Moody’s upgraded its ratings to Ba2 stable, reflecting consistently strong operating and financial performance and a sound liquidity position. The City maintains a manageable debt burden, with Capital Charges to Operating Expenditure ratios consistently within or below National Treasury norms.
The City’s primary strategic focus has shifted from standard service delivery to building resilience against national systemic failures and climate risks. This emphasis on resilience is demonstrated through two major strategic undertakings.
For energy resilience, Cape Town has taken the national lead by completing its Wheeling Bilateral Programme, opening its power grid to private investors. This allows businesses and residents to procure electricity directly from independent power producers, forming a critical part of the plan to reduce reliance on Eskom and shield residents from load-shedding.
For water resilience, the City is driving a substantial R120 billion 10-year infrastructure investment plan. This program is backed, in part, by a ZAR 2.8 billion local currency senior loan from the International Finance Corporation, secured specifically to upgrade and expand water, sanitation, and electrical infrastructure.
A core component is the New Water Programme, which aims to diversify water sources, including planning the large-scale Faure New Water Scheme, an advanced water purification project expected to deliver 300 million litres of water per day by 2030.
This demonstrates that the City’s financial capacity enables advanced strategic operational performance, positioning it as a credible global investment partner. Cape Town’s approach reflects hard lessons learned from the 2018 water crisis—resilience requires massive upfront investment, and only financially sound municipalities can secure the capital and manage the multi-decade projects necessary to insulate themselves from national infrastructure collapse.
8. Prince Albert
Prince Albert, ranked eighth nationally, emphasizes sustainability and community planning. Despite its relatively small size, it demonstrates strong commitment to transparent and long-term local development.
The municipality’s success roots in effective community engagement and governance, with ward committees demonstrating consistent functionality. Furthermore, it is dedicated to strategic foresight, investing in master planning efforts supported by provincial funding to ensure future development aligns closely with long-term community needs and financial viability.
Small size becomes an advantage when governance is competent—Prince Albert can implement participatory planning effectively because the scale allows genuine community input rather than token consultation exercises.
9. Midvaal (Gauteng’s Standout)
Midvaal is crucial in this ranking because it represents the exception to Western Cape dominance, proving that strong governance and financial sustainability are achievable outside that province. It is Gauteng’s definitive standout performer.
Midvaal’s governance model prioritizes institutional integrity. The municipality maintains a policy of zero tolerance for fraud and corruption, coupled with robust integrity management systems.
Furthermore, it adheres strictly to legislative reporting requirements, ensuring comprehensive statutory reporting, including timely production of annual performance reports and audited financial statements.
This proactive commitment to clean administration provides the stable platform necessary for effective service delivery and financial success. Midvaal’s success demonstrates that the Western Cape model is replicable—political will combined with professional administration can overcome challenging provincial contexts.
10. Breede Valley
Breede Valley is recognized nationally for sheer institutional discipline and reliability, specifically for achieving clean audit outcomes for ten consecutive years and consistently maintaining funded budgets over the same period.
This sustained track record accentuates that good governance principles, coupled with sound monitoring and oversight mechanisms, are embedded within the institutional culture.
The consistency in financial management provides the stability needed to ensure municipal funds are used for their intended purpose and that the administration operates within the law—the non-negotiable foundation for addressing other community challenges such as poverty and unemployment.
Ten consecutive clean audits represent something rare in South African local government: an institutional culture where compliance is routine rather than exceptional.
Conclusion
The 2025 Municipal Financial Sustainability Index confirms a stark duality in South Africa’s local government landscape.
A select few municipalities, predominantly located in the Western Cape, continue to demonstrate that institutional discipline, financial foresight, and administrative integrity are the non-negotiable foundations of effective service delivery and regional economic prosperity.
The top 10 municipalities are distinguished not only by their fiscal soundness—measured across the six rigorous MFSI pillars—but also by their strategic foresight.
They invest proactively in infrastructure maintenance, build buffers against national crises such as the energy crisis, and cultivate accountability structures that restore public trust. Midvaal’s success demonstrates that this standard of excellence is not limited by provincial boundaries but is achievable wherever ethical political leadership combines with professional, disciplined administration.
Local government is too important to be left solely to politicians and administrators. Active citizenry is critical to holding elected representatives and municipal officials accountable.
Residents are encouraged to monitor their municipality’s performance, scrutinizing Auditor-General reports and demanding adherence to the MFSI principles: ensuring budgets are funded, debt is managed prudently, and infrastructure is maintained for the long term.
Supporting accountable leaders and demanding transparency are the most effective actions citizens can take to foster genuine, sustainable improvement in their communities.
We invite readers to engage with this report, share their local governance experiences, and comment on the essential role of financial sustainability in driving quality of life and economic growth in their communities. Your active participation is the ultimate check against the erosion of institutional integrity.