"Co-operative Governance and Traditional Affairs MEC Nomusa Dube has today met the full council to officially announce the intervention into the ailing municipality," department spokesperson Vernon Mchunu said in a statement on Tuesday.
The municipality was "technically insolvent".
Currently six municipalities in the province are under provincial government administration.
Another department spokesperson, Lennox Mabaso, said that apart from the Umzinyathi and the Ugu district municipalities, the AbaQulusi, Imbabazane, Indaka and Mtubatuba local municipalities were also under administration.
According to the department, Umzinyathi lacked budgetary controls and was overspending.