A Guide for Councillors

Understanding the Municipal Finance Management Act

Introduction

An overview The Municipal Finance Management Act (MFMA) was passed to modernise municipal fi nancial management practices. The primary aim of the Act is to make municipal fi nance sustainable so that municipalities can deliver the best services possible to all their residents, customers, users and investors. The MFMA establishes a new legal framework for fi nancial management in municipalities by clarifying and separating the roles and responsibilities of the mayor, executive and non-executive councillors and of fi cials. The Act empowers the mayor (or executive committee) to provide political leadership by being responsible for policy and outcomes. It spells out a legal framework for the municipal manager and other senior managers responsible for implementation and outputs. Non-executive councillors are important in approving policy and play a monitoring role through the Council. The law enables managers to manage, but makes them more accountable by introducing regular and consistent reporting. The MFMA gives expression to the Constitutional provision which obliges all three spheres of government to be transparent about their budget and fi nancial affairs and communicate with their community about progress on service delivery.

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The Role of Councillors in Municipal Finance Management