Abstract
This paper reports on the perceived effectiveness of municipal financial management (MFM), on the performance of inventory stock management, by South African local government. The study aimed to evaluate and discuss various factors affecting the effectiveness of MFM on the performance of inventory stock management, in a local municipal government of South Africa, with specific reference to the Kwa-Zulu Natal (KZN) Province. The MFM Act was used as a theoretical framework for the study, and a quantitative research method was applied. The questionnaire was formulated based on information obtained from the literature, and was distributed to only one KZN local government department. The sample consisted of 57 respondents, selected using a census sampling method. The results indicate that there is significant relationships between experience and performance of inventory stock management (p=.003a,b*), experience and effectiveness/efficiency of MFM (p=.000a,b*),as well as experience and the economic viability of MFM (p=.000b,c*).Interestingly, the respondents also indicated that, although there is good inventory stock management, there is a weak relationship between the effectiveness/efficiency, economic viability, and transparency of MFM. This study recommends that further research should aim to advance financial management skills in South African local government, in order to build financial management capacity to deal with inventory stock management issues. This should enable communication with other related structures and improve the understanding of each other’s efforts in the organization.
Highlights
Recent studies by Aikins (2011) and Attila &Cristina (2010), indicate that local government authorities have doubts regarding municipal financial management (MFM), it has been noted that local government authorities use MFM to regulate the finances of the state
There was a section dealing with inventory stock management, while another section dealt with the effectiveness of MFM on the performance of inventory stock management
The findings provided adequate evidence, testifying that most respondents do not have sufficient understanding regarding the principles of MFM, concerning inventory stock management
Summary
Recent studies by Aikins (2011) and Attila &Cristina (2010), indicate that local government authorities have doubts regarding municipal financial management (MFM), it has been noted that local government authorities use MFM to regulate the finances of the state. This regulation includes that of inventory stock management. The understanding will shed light on the role played by MFM in managing inventory stock by the South African local government
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