Financial Sustainability Of Local Governments In Southern Africa

This book delves into the critical issue of ensuring the long-term financial viability of local governments in the diverse region of Southern Africa. Across Southern Africa, cities and communities are facing a multitude of challenges, from rapid urbanization and infrastructure challenges to social inequality and environmental degradation. In this thought-provoking book, the authors explore the intricate relationship between financial sustainability and the pursuit of sustainable cities and communities through different lenses. Drawing on extensive research and case studies from various countries in the region, this book provides a comprehensive analysis of the financial realities faced by local governments. It examines the factors influencing revenue generation, expenditure management, and fiscal governance, shedding light on the complexities of financial decision-making in the context of limited resources and pressing development needs. Furthermore, it offers practical insights and actionable recommendations for policymakers, practitioners, and academics. It explores innovative approaches to revenue diversification, efficient expenditure allocation, and effective fiscal management, with the ultimate aim of fostering sustainable development, social services delivery, and environmentally sustainable infrastructure in Southern African cities and communities. This is an essential resource for anyone interested in understanding the challenges and opportunities associated with financial sustainability in the context of urbanisation and sustainable development in greater Africa. It serves as a guide and inspiration for building financially resilient local governments that can support the aspirations and well-being of their citizens while contributing to the broader vision of sustainable cities and communities.

This text is not only suitable for undergraduate students but is also ideal for use by professionals employed in or working with local government in South Africa.

Examining cutting-edge issues of international relevance in the ongoing redesign of the South African local government fiscal system, the contributors to this volume analyze the major changes that have taken place since the demise of apartheid. The 1996 Constitution and subsequent legislation dramatically redefined the public sector, mandating the development of democratic local governments empowered to provide a wide variety of key public services. However, the definition and implementation of new local functions and the supporting democratic decision-making and managerial capabilities are emerging more slowly than expected.

South African local government has undergone radical transformation. As part of the reform process, a local government financial management best-practice technical assistance program (MFMTAP) has targeted financial management, especially budget quality reform. Dollery and Graves (2008) have examined the efficacy of the South African National Treasury (NT's) municipal budget funding compliance technique for measuring adherence to the Municipal Finance Management Act's (MFMA) budget funding requirements using a single sample metropolitan municipality as a case study. This paper now evaluates the robustness and validity of the funding compliance instrument further as a reform performance measurement tool by comparing the results of four geographically and demographically different municipalities. The paper also introduces a performance 'trend' instrument similar to a 'Likert scale' as a basis for comparing municipal performance. Optimal tax revenue theory is invoked to examine this key revenue variable for producing a compliant budget. The paper finds the 'budget funding' reform component of the Best-Practice Technical Assistance (BPTA) program ineffective and an unsustainable.

Abstract: Since South Africa held its first democratic elections in 1994, it has given significant attention to building an effective system of decentralization including provincial and local government. While provincial governments are responsible mainly for the implementation of social services such as health and education, the provision of much of the urban infrastructure is the responsibility of local government. Although many challenges remain, the country has made significant progress over the past decade in addressing urban service backlogs in poor areas. At the same time, it has greatly improved macroeconomic fundamentals. The system of financing local government seeks to place accountability firmly at the local level, with most revenues in the larger urban centers raised locally through a combination of local taxes and fees for services, while poorer regions are predominantly grant funded. The objective has been to encourage the financing of capital infrastructure through local borrowing based on sustainable, transparent local finances rather than national repayment guarantees, which are outlawed. There is some indirect subsidization of loans through the state-owned Development Bank of Southern Africa. But the emphasis is on achieving redistribution through transparent, formula-based grants paid directly from national to local governments. While further bedding down of the system is needed, the approach is proving largely successful. The paper concludes by recommending that the existing division between provinces as providers of social services and local governments as the key locus of responsibility for services related to the built environment should be strengthened, particularly through the devolution of more urban transport related functions. A number of key risks are also highlighted, including issues related to the reform of local business taxes.

Documents the dynamics of local government transformation and captures the key themes of the debates about policy options, lessons and key strategic decisions. This text is suitable for government officials, students, researchers, specialists, community leaders, businesses and the general reader.