Received:
2026-05-15 | Accepted:
2026-09-10 | Published:
2026-09-30
Title
Financial governance transformation strategies for sustainable development in South African municipalities
Abstract
Challenges such as poor internal control, lack of transparency, poor service delivery and high crime rate due to poor financial governance practices suggest the need for digital and innovative strategies for sustainable development. Municipalities' financial distress has intensified to the point that local government is experiencing unsustainable development. The annual general report highlighted that 28% of municipalities misreported their revenue due to incorrect billing or a lack of proper audit evidence. Considering these challenges, the study seeks to identify and explore possible solutions to address financial governance practices. The main focus of this study is on local municipalities, and qualitative research methods were used. Face-to-face interviews were conducted with 15 participants who serve on the Municipal Public Accounts Committee and Audit Finance Committees at local municipalities. The data collected indicate the need for proper monitoring of municipalities' financial governance practices, as participants showed that municipalities face many problems due to financial mismanagement. The municipalities are failing to eliminate the challenges they face due to poor financial practices, as most participants could not provide a clear view of strategies for addressing these challenges. Therefore, the study has the potential to explore the transformation of financial governance through digital and innovative strategies that could help eliminate financial mismanagement and poor service delivery, and ensure that financial governance practices promote sustainable development.
Keywords
digital, governance, financial, innovation, internal controls, sustainable development
JEL classifications
O20
, Q10
URI
http://jssidoi.org/ird/article/282
DOI
Pages
267-278
Funding
This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License
References
Ahmad, M., Wilkins, S. (2025). Purposive sampling in qualitative research: a framework for the entire journey. Qual Quant, 59, 1461-1479 (2025) https://doi.org/10.1007/s11135-024-02022-5
Search via ReFindit
Akinsola, K. (2025). Regulatory Compliance and the Role of Corporate Governance in Preventing Financial Misstatements. Available at SSRN https://doi.org/10.2139/ssrn.5126627
Search via ReFindit
Auditor-General of South Africa. (2024). 2023/2024 municipalities' report still shows challenges. SABC News https://www.sabcnews.com/sabcnews/2023-2024-agsa-municipalities-report-still-shows-challenges/
Search via ReFindit
Aziz, H., & Cek, K. (2026). The role of board gender diversity in financial performance: role of sustainability, climate risk and internal control systems. Applied Economics, 58(4), 721-736 https://doi.org/10.1080/00036846.2025.2456129
Search via ReFindit
Bakhtiar, B. (2021). Accountability and Transparency in Financial Management of Village Fund Allocations in Achieving Good Governance. ATESTASI: Jurnal Ilmiah Akuntansi, 4(2), 230-245 https://doi.org/10.57178/atestasi.v4i2.269
Search via ReFindit
Bhanye, J., & Shayamunda, R. (2025). The promise of civic tech: digital technologies and transparent, accountable governance. In Digitalisation and Public Policy in Africa: GovTech and CivicTech Innovations (pp. 93-122). Cham: Springer Nature Switzerland https://doi.org/10.1007/978-3-031-75079-3_5
Search via ReFindit
Bouchetara, M., Zerouti, M., & Zouambi, A. R. (2024). Leveraging artificial intelligence (AI) in public sector financial risk management: Innovations, challenges, and future directions. EDPACS, 69(9), 124-144 https://doi.org/10.1080/07366981.2024.2377351
Search via ReFindit
Brackley, J. (2025). Audit and financial reporting under austerity localism—the case of the Birmingham City Council ‘bankruptcy.’ Public Money & Management, 1-12 https://doi.org/10.1080/09540962.2025.2466494
Search via ReFindit
Chiwawa, N., & Uwizeyimana, D. E. (2025). Enhancing Financial Governance and Compliance for Sustainable Service Delivery in Local Government: A Case of eThekwini Metropolitan Municipality. International Journal of Applied Research in Business and Management, 6(1) https://doi.org/10.51137/wrp.ijarbm.2025.ncet.45717
Search via ReFindit
Finkler, S. A., Calabrese, T. D., & Smith, D. L. (2025). Financial management for public, health, and not-for-profit organisations. CQ Press https://books.google.lt/books/about/Financial_Management_for_Public_Health_a.html?id=dW9KEAAAQBAJ&redir_esc=y
Search via ReFindit
Gorus, M. S. (2024). Does globalisation promote green growth? Empirical evidence from the Organisation for Economic Co-operation and Development countries. In Sustainable Economic Development: Fostering the United Nations Goals (pp. 27-42). Springer Nature Singapore https://doi.org/10.1007/978-981-97-3767-3_2
Search via ReFindit
Gumbi, N. (2025). Enhancing good governance in South African rural municipalities. Social Sciences and Education Research Review, 12(2), 320-326 https://doi.org/10.5281/zenodo.17870733
Search via ReFindit
Hendriks, C. (2018). Municipal financing for sustainable development: A case of South Africa. Local Economy: The Journal of the Local Economy Policy Unit, 33(7), 757-774 https://doi.org/10.1177/0269094218811799
Search via ReFindit
Lim, W. M. (2025). What is qualitative research? An overview and guidelines. Australasian Marketing Journal, 33(2), 199-229 https://doi.org/10.1177/14413582241264619
Search via ReFindit
Maingehama, F. N. (2024). Growth effects of human capital and innovation in small and medium sized South African firms before and after the Covid-19 pandemic [Doctoral dissertation, University of the Witwatersrand] https://actacommercii.co.za/index.php/acta/article/view/1357/2673
Search via ReFindit
Mateus, A. D., Allen-Ile, C., & Iwu, C. G. (2014). Skills shortage in South Africa: Interrogating the repertoire of discussions. Mediterranean Journal of Social Sciences, 5(6), 63-73 https://doi.org/10.5901/mjss.2014.v5n6p63
Search via ReFindit
McKenzie, M., & Marx, B. (2025). A Post-Mortem of Municipal Audit Action Plans Used to Resolve Financial Distress in South Africa. Sustainability, 17(4), 1535 https://doi.org/10.3390/su17041535
Search via ReFindit
Mishi, S., Mbaleki, N., & Mushonga, F. B. (2022). Financial mismanagement and efficiency trade-off in local municipalities: Lessons from Eastern Cape, South Africa. Journal of Local Government Research and Innovation, 3, 68 https://doi.org/10.4102/jolgri.v3i0.68
Search via ReFindit
Mofokeng, S., & Nkgapele, S. M. (2025). The Role of Medium-Term Budgets in Enhancing Fiscal Sustainability and Service Delivery in South African Municipalities. International Journal of Management, Entrepreneurship, Social Science and Humanities, 8(2), 50-66 https://doi.org/10.31098/ijmesh.v8i2.2717
Search via ReFindit
Moolman, S., & Van Der Waldt, G. (2022). The effectiveness of financial governance structures in the South African Public Sector. African Journal of Public Affairs, 13(1), 1-26 https://journals.co.za/doi/pdf/10.10520/ejc-ajpa_v13_n1_a2
Search via ReFindit
Musyoki, K. M. (2023). Internal control systems and their role in financial fraud prevention in Kenya. African Journal of Commercial Studies, 3(3), 173-180 https://doi.org/10.59413/ajocs/v3.i3.4
Search via ReFindit
Obicci, P. A. (2025). Corrupt elites, administrative cadres and public service in Africa: Islands of vanity. Journal of Management and Science, 15(1), 42-82 https://doi.org/10.26524/jms.15.6
Search via ReFindit
Republic of South Africa. (2003). Municipal Financial Management Act (Act 56 of 2003). Government Printers. Republic of South Africa. (2007). Municipal Fiscal Power and Functions Act (Act 12 of 2007). Government Printers. Republic of South Africa. (2013). Protection of Personal Information Act (Act 4 of 2013). Government Printers. Saluja, S., & Nair, A. J. (2024). An analysis on frauds affecting the financial security of the Indian banking sector: A systematic literature review. Ethical Marketing through Data Governance Standards and Effective Technology, 201-218 https://doi.org/10.4018/979-8-3693-2215-4.ch017
Search via ReFindit
Sinervo, L. M. (2020). Financial sustainability of local governments in the eyes of Finnish local politicians. Sustainability, 12(23), 10207 https://doi.org/10.3390/su122310207
Search via ReFindit
Stephens, R. J. S. (2025). Quadruple Helix co-creation and cities: Behavioral and institutional changes in innovation capacities and cultures. Cities, 157, 105579 https://doi.org/10.1016/j.cities.2024.105579
Search via ReFindit
Suljic, V. (2025). Strategic leadership in AI-driven digital transformation: Ethical governance, innovation management, and sustainable practices for global enterprises and SMEs. SBS Journal of Applied Business Research, 13(1), 17-35 https://doi.org/10.70301/JOUR/SBS-JABR/2025/13/1/2
Search via ReFindit
Tariq, M. U. (2025). Digital Accountability: Revolutionizing Public Sector Transparency and Service Delivery. In Enhancing Public Sector Accountability and Services Through Digital Innovation (pp. 129-154). IGI Global Scientific Publishing https://doi.org/10.4018/979-8-3693-9251-5.ch004
Search via ReFindit
Tinuoye, A. T. (2023). An overview of corruption in the context of the public sector. Management Strategies and Tools for Addressing Corruption in Public and Private Organizations, 19-38 https://doi.org/10.4018/978-1-6684-8536-1.ch002
Search via ReFindit
Tran, A. T. X., & Le, T. M. (2024). Fintech development influences corporate ESG performance: Evidence from Southeast Asia. Journal of Management and Governance, 1-38 https://doi.org/10.1007/s10997-024-09719-7
Search via ReFindit
Vasiliu-Feltes, I. (2024). Safeguarding financial resilience through digital trust and responsible innovation. Journal of Risk Management in Financial Institutions, 17(2), 130-141 https://doi.org/10.69554/PWOV3485
Search via ReFindit
Visser, M., Damman, M., & Kraaykamp, G. (2026). Financial hardship while working: A comparison of standard and non-standard workers across Europe. Economic and Industrial Democracy, 47(1), 6-29 https://doi.org/10.1177/0143831X241287649
Search via ReFindit
Wali, K., van Paridon, K., & Darwish, B. K. (2023). Strengthening banking sector governance: challenges and solutions. Future Business Journal, 9(1), 95 https://doi.org/10.1186/s43093-023-00279-0
Search via ReFindit
Wijaya, S., Alfitri, Thamrin, M. H., & Salya, D. H. (2024). The Impact of Electronic Government Policy on Transparency and Accountability in Public Services. International Journal of Science and Society, 6(2), 411-421 https://doi.org/10.54783/ijsoc.v6i2.1157
Search via ReFindit
RSS 1.0