Selected Key Internal Factors Underpinning Local Government Funding in the Municipal Sector in South Africa

Abstract

Since the dawn of democracy in 1994, the South African government embarked on transforming the Local Government (LG) agenda, advocating for a developmental LG system by changing “political, institutional and administrative systems, thereby creating a new framework for the municipal finance landscape” (Coetzee and Kleynhans 2019: 1). In this regard, all municipalities play a critical role in alleviating levels of poverty and addressing inequality through the promotion of growth that supports economic and social development. This study seeks to determine the impact of the internal factors underpinning local government funding in the municipal sector. The study put forward the arguments that relate to the municipal performance including managerial competency, competitive advantage, lack of Local Government (LG) innovation, stakeholders’ consultative capacity, poor financial management, and weak municipal accountability and institutional oversight. Empirical data was collected from 30 key staff members including senior managers from four municipalities in Zululand district jurisdiction. A self-designed questionnaire was applied to solicit both qualitative and quantitative data. 5-point Likert scale part of the questionnaire was used for quantitative data collection and open-end questions section of the questionnaire was used for qualitative data collection. The outcomes of the study showed that municipal competencies such as managerial, financial acumen and strategic are critical for service delivery. Moolman (2018: 1) asserts these demands form the basis of factors that contribute to cost overruns, inadequate planning, poor cost estimates, and scope changes, along with project delays, corruption and material price escalation in municipalities. It is envisaged a study of this nature would offer insights into solutions to the major causes of social service inefficiencies, social inequality and social injustice from a LG funding point of view. Further, the study projects useful implications for municipal management and community to ensure that stakeholder engagement is critical for municipality performance and growth.