Traditional Leaders, Business and CIBA: The Compact Reshaping Local Government Accountability
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For three decades, traditional leaders in South Africa have watched municipal decisions get made in rooms they were never invited into. The law technically gives them a voice, through Integrated Development Plan forums and Section 79 and 80 committees. In practice, that voice has counted for little. Municipalities have never been required to report on what royal leaders said, or to explain why their input was ignored.
That is about to change, and accountants have a direct role to play in making it work.
1. The problem is bigger than any one municipality
Only 15 percent of South Africa's 257 municipalities achieved a clean audit in the 2024/25 cycle. Not one of the country's eight metros managed it. Irregular expenditure across the country topped 40.1 billion rand, and 45 percent of municipalities adopted budgets they could not actually fund. Behind those numbers sit real consequences. A 12 kilometre road in the Eastern Cape has been paid for three times over without being completed. Rural residents wait weeks for electricity faults to be fixed because there is no one at municipal level who answers directly to their community.
Traditional leaders have carried the blame for these failures for years, even though they were never given the authority, the funding, or the seat at the table needed to prevent them.
2. A Compact is being built to change that
CIBA has spent the past few months on the road with the Royal Leaders of South Africa (ROLESA), regional chambers of commerce, and traditional authorities in Limpopo, Gauteng and KwaZulu-Natal and the Western Cape, working through exactly this problem. The engagements are building toward a formal Compact between business, CIBA and traditional leadership, designed to sit alongside the statutory compact created by Chapter 7 of the revised White Paper on Local Government.
Chapter 7 would require National Treasury to properly fund traditional councils, including administrative staff and transport, and would compel municipalities to record how royal leaders' input was considered and publish the outcome every year. Municipalities that refuse to honour that compact would risk losing access to the additional funding needed to close South Africa's estimated 150 billion rand local government funding shortfall.
The business side of the Compact, developed jointly by CIBA, regional chambers and ROLESA under models such as the Road Charter (the business compliance mechanism developed with ROLESA and regional chambers) and the Royal Authority for Commerce and Charter, asks participating businesses to commit to a simple code. Employ locally. Seek the permission of traditional leadership before operating on communal land. Avoid conflicts of interest. In return, compliant businesses gain formal standing with the community they operate in, something no compliance certificate currently offers.
CIBA's position throughout the roadshow has been consistent. This is not CIBA leading a new structure. It is CIBA supporting royal leadership and business to finally build the coordination that three decades of legislation promised but never delivered.
3. Where the accountant fits in
This is where the profession has a genuine stake, and a genuine opportunity.
Traditional councils that gain funding and formal standing under the new framework will need exactly what accountants provide. Someone to manage that funding properly. Someone to sit in on Integrated Development Plan forums and Section 79, 80 and 81 committee meetings and make sure the numbers hold up. Someone to help a royal council understand a municipal budget well enough to object to it credibly, which the White Paper would give them the right to do.
Municipalities carrying unfunded budgets and mounting irregular expenditure are not short of good intentions. They are short of financial oversight capacity in exactly the areas where traditional leaders now stand to gain a voice. A Chartered Business Accountant who understands both municipal finance and the compact framework is positioned to be indispensable in that gap, whether as an advisor to a traditional council, a compliance partner to a business signing the Road Charter, or a resource to a chamber of commerce building its own version of the compact.
There is an economic case too, and it is not abstract. An estimated 17 million South Africans live in rural areas under traditional leadership, largely excluded from the formal economy since 1994. Every rand of municipal funding that reaches its intended purpose, and every business that operates on communal land with proper local buy-in and compliant bookkeeping, adds to local economic activity that currently leaks away through irregular expenditure and stalled projects. Accountants who position themselves inside this space are not doing charity work. They are opening a new, underserved advisory market at exactly the moment legislation is about to make it a formal requirement.
4. What accountants can do now
The White Paper has not yet been enacted, and the Compact is still being finalised. That gives the profession a window, not a deadline.
Accountants working with municipal clients, rural businesses, or community organisations should start familiarising themselves with Chapter 7 of the White Paper on Local Government and with the structure of the proposed Compact. Those with clients operating on or near communal land should understand what the Road Charter will expect of them before it becomes a market expectation rather than a voluntary one. And practices looking to grow into a new advisory line should watch for the pilot projects CIBA and ROLESA are expected to identify once the roadshow concludes in KwaZulu-Natal and Cape Town.
CIBA will keep members updated as the Compact document is finalised and a formal signing date is set. Members interested in the municipal finance and traditional governance space can follow developments through CIBA's cpd.myciba.org
Should you be interested learning more about Local Government accounting sign up for this Short Learning Online Course:
Municipal Financial Management & Audit Compliance - cpd.myciba.org
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