Irregular and Wasteful Expenditure as Socio-Economic Challenges for Local Municipalities: RegTech and SupTech as Digital Mechanisms of Compliance and Oversight

Abstract

Irregular and wasteful municipal expenditure is a major socio-economic challenge because procurement non-compliance, weak expenditure discipline, and fragmented oversight erode public trust, limit service delivery, and destabilize municipalities. Although RegTech and SupTech are well studied in banking and private-sector compliance, little is known about how municipal practitioners view the organizational and operational conditions that shape digital compliance in local government. This study examines how officials interpret irregular and wasteful expenditure, how current controls operate, and how RegTech and SupTech might strengthen prevention and accountability. A phenomenological qualitative design was applied. Semi-structured interviews were conducted in South Africa in 2025 with eight purposively selected practitioners involved in supply chain management, financial administration, and expenditure control and oversight. Data were analyzed using Braun and Clarke’s thematic analysis, supported by iterative coding, comparative categorization, and cross-participant checking. Participants largely framed irregular expenditure as procedural non-compliance arising from administrative weaknesses and fragmented controls, rather than necessarily corruption, whereas wasteful expenditure was linked to clear financial loss, reputational harm, and declining public confidence. Municipalities were described as relying on manual verification, siloed systems, and retrospective audits. Key drivers included delayed payments, weak contract management, inconsistent enforcement, and poor coordination. RegTech and SupTech were seen as most valuable when implemented as compliance-by-design through automated approvals, transaction-level validation, exception reporting, benchmarking analytics, and early-warning indicators. Impact was constrained by poor data integration, organizational resistance, limited digital readiness, and uneven accountability. The study extends RegTech and SupTech scholarship into municipal public-finance governance by conceptualizing digital compliance as a socio-technical mechanism shaped by culture, capacity, trust, and accountability structures.