Abstract
South Africa has experienced immense changes in the post- apartheid era and coordinated local public policy has sought to expand and improve the level of basic services provided to previously disadvantaged people. Local government has played a pivotal role in this process and has been subjected to intense reform in an effort to enhance its effective- ness and broaden its range of activities. While a number of scholars have examined the administrative, political and social dimensions of the local government reform program, little attention has focused on the economic efficiency of service delivery. This paper seeks to remedy this neglect by evaluating the productive efficiency with which municipal councils have delivered electricity, domestic waste removal, sanitation and water in line with their new responsibilities using Data Envelopment Analysis (DEA) techniques applied to cross-sectional data covering the period 2006/2007 for 231 local municipalities and 46 district municipalities.
Highlights
Local government systems across the world have come under intense scrutiny over the past two decades
The efficiency estimates are executed under constant returns to scale (CRSTE) and variable returns to scale (VRSTE); they embrace output-orientated as well as input-orientated approaches
Following Coelli et al (1998:150), the use of the constant returns to scale (CRS) specification when not all firms are operating at the optimal scale results in measures of relative efficiency (TE) which are confounded by scale efficiencies (SE)
Summary
Local government systems across the world have come under intense scrutiny over the past two decades. ‘community empowerment and redistribution’ should be addressed While these objectives are certainly laudable in the context of post-apartheid South African society, striven by striking racial inequalities, they placed a massive burden on a municipal system that had previously confined its activities to a narrow range of local services. This burden was exacerbated by an acute lack of local government capacity, especially in terms of administrative and technical skills (Buthelezi and Dollery, 2004; Dollery, et al, 2005), as well as very weak financial compliance management (Dollery and Graves, 2009) and chronic funding shortages (Bahl and Smoke, 2003) - problems apparent at higher tiers of government in South Africa (Dollery, 2004; Dollery and Snowball, 2003).
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