A Financial Sustainability Model for the South African Local Government
- Authors: Mhlanga, Shepherd
- Date: 2019
- Subjects: Local government -- South Africa -- Eastern Cape -- Finance Municipal finance -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Doctoral , D.Admin
- Identifier: http://hdl.handle.net/10353/13715 , vital:39699
- Description: Local government financial sustainability leverages a local municipality’s capabilities to conceptualize and implement an array of its developmental programmes. This thesis evaluates the state of the initiatives for bolstering financial sustainability in the increasingly complex contemporary South African local government sphere. The motive of the study was to identify major paradoxes and a local government financial sustainability model that could be extracted and suggested for mitigating such constraints. Using a meta-synthesis as a principal technique in content analysis, findings revealed that major determinants of local government financial sustainability are often linked to the application of the four-step’s processes in strategic cyclical financial sustainability framework and three foundational constructs for financial sustainability management. The four-step’s processes in strategic cyclical financial sustainability framework were found to aid environmental analysis, identification of the sources of revenues and revenue generation, managing the utilization of the generated revenues and monitoring and evaluation. As it emerged from the findings, these positive effects of strategic cyclical financial sustainability framework are often illuminated by three foundational constructs for financial sustainability that leverage financial risk management, governance and leadership. However, in lieu of the application of relevant mitigating strategies, it also emerged from the analysis of the findings that initiatives that bolster financial sustainability may still be constrained by poor analysis and identification of the level of financial sustainability maturity. Other paradoxes were found to be linked to lack of suitable government financing models, poor strategic financial planning and budgeting as well as lack of effective models for managing equity. However, even in the midst of such paradoxes, findings still indicated that the concept of financial sustainability is a notion which is increasingly being emphasized by the South African local government sphere. To leverage municipal financial sustainability, most municipalities were found to use financial sustainability models and methods such as central financial grant system, SALGA’s model for financial sustainability, investment in revenue-generating activities and managing municipal operational efficiency as a driver of cost 4 | P a g e minimisation. However, despite such significant strides, findings still revealed that even with various socio-economic initiatives undertaken to leverage financial sustainability of the South African local government, the state of financial sustainability in the South African local government sphere seems to be at risk as viewed from such issues as compliance, systematic and strategic levels. As it emerged from the findings, this is attributable to the fact that most initiatives for improving financial sustainability in the South African local government are often still constrained by inadequate municipal capacity, limited income-generating activities, deficient local government procurement system and poor leadership and governance. Such findings seem consonant with theoretical findings that signified the major paradoxes of financial sustainability in the contemporary public sector organisations are often associated with poor analysis and identification of the level of financial sustainability maturity, lack of suitable government financing models, poor strategic financial planning and budgeting and lack of effective models for managing equity. Drawing from these findings, it is argued it is critical that the Department of Local Government adopts and applies the local government financial sustainability model akin to the conceptual model suggested in Figure 1. The application of such a model would require integration and use of the four main pillars (strategic financial planning, income diversification, sound financial administration and management, and own income generation) for local government financial sustainability, three foundational constructs (financial risk management, financial governance and financial ethical leadership) for local government financial sustainability, and three foundational nonfinancial constructs (political stability, fiscal and economic stability, forecasting and sensing to mitigate the devastating negative effects of natural calamities and disaster) for local government financial sustainability. It was further argued that all these must be accompanied by measurement of the overall maturity of the financial sustainability of the local municipality using four perspectives (liquidity, resilience, service and fiscal responsibility and public confidence) of local government financial sustainability in conjunction with the five spectrums (at risk, compliance-based, incremental, strategic and systematic) of local government financial sustainability.
- Full Text:
- Date Issued: 2019
- Authors: Mhlanga, Shepherd
- Date: 2019
- Subjects: Local government -- South Africa -- Eastern Cape -- Finance Municipal finance -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Doctoral , D.Admin
- Identifier: http://hdl.handle.net/10353/13715 , vital:39699
- Description: Local government financial sustainability leverages a local municipality’s capabilities to conceptualize and implement an array of its developmental programmes. This thesis evaluates the state of the initiatives for bolstering financial sustainability in the increasingly complex contemporary South African local government sphere. The motive of the study was to identify major paradoxes and a local government financial sustainability model that could be extracted and suggested for mitigating such constraints. Using a meta-synthesis as a principal technique in content analysis, findings revealed that major determinants of local government financial sustainability are often linked to the application of the four-step’s processes in strategic cyclical financial sustainability framework and three foundational constructs for financial sustainability management. The four-step’s processes in strategic cyclical financial sustainability framework were found to aid environmental analysis, identification of the sources of revenues and revenue generation, managing the utilization of the generated revenues and monitoring and evaluation. As it emerged from the findings, these positive effects of strategic cyclical financial sustainability framework are often illuminated by three foundational constructs for financial sustainability that leverage financial risk management, governance and leadership. However, in lieu of the application of relevant mitigating strategies, it also emerged from the analysis of the findings that initiatives that bolster financial sustainability may still be constrained by poor analysis and identification of the level of financial sustainability maturity. Other paradoxes were found to be linked to lack of suitable government financing models, poor strategic financial planning and budgeting as well as lack of effective models for managing equity. However, even in the midst of such paradoxes, findings still indicated that the concept of financial sustainability is a notion which is increasingly being emphasized by the South African local government sphere. To leverage municipal financial sustainability, most municipalities were found to use financial sustainability models and methods such as central financial grant system, SALGA’s model for financial sustainability, investment in revenue-generating activities and managing municipal operational efficiency as a driver of cost 4 | P a g e minimisation. However, despite such significant strides, findings still revealed that even with various socio-economic initiatives undertaken to leverage financial sustainability of the South African local government, the state of financial sustainability in the South African local government sphere seems to be at risk as viewed from such issues as compliance, systematic and strategic levels. As it emerged from the findings, this is attributable to the fact that most initiatives for improving financial sustainability in the South African local government are often still constrained by inadequate municipal capacity, limited income-generating activities, deficient local government procurement system and poor leadership and governance. Such findings seem consonant with theoretical findings that signified the major paradoxes of financial sustainability in the contemporary public sector organisations are often associated with poor analysis and identification of the level of financial sustainability maturity, lack of suitable government financing models, poor strategic financial planning and budgeting and lack of effective models for managing equity. Drawing from these findings, it is argued it is critical that the Department of Local Government adopts and applies the local government financial sustainability model akin to the conceptual model suggested in Figure 1. The application of such a model would require integration and use of the four main pillars (strategic financial planning, income diversification, sound financial administration and management, and own income generation) for local government financial sustainability, three foundational constructs (financial risk management, financial governance and financial ethical leadership) for local government financial sustainability, and three foundational nonfinancial constructs (political stability, fiscal and economic stability, forecasting and sensing to mitigate the devastating negative effects of natural calamities and disaster) for local government financial sustainability. It was further argued that all these must be accompanied by measurement of the overall maturity of the financial sustainability of the local municipality using four perspectives (liquidity, resilience, service and fiscal responsibility and public confidence) of local government financial sustainability in conjunction with the five spectrums (at risk, compliance-based, incremental, strategic and systematic) of local government financial sustainability.
- Full Text:
- Date Issued: 2019
Assessment of the role of the board of directors in the implementation of corporate governance in the state owned entities: a case in the Eastern Cape Province
- Authors: Makhala, Nombuyiselo
- Date: 2019
- Subjects: Corporate governance Directors of corporations
- Language: English
- Type: Thesis , Doctoral , D.Admin
- Identifier: http://hdl.handle.net/10353/13642 , vital:39687
- Description: Corporate governance is a well-recognized governing method, which ensures that the organization achieves its goals. This concept has received too much attention due to the number of reported corporate scandals in both public and private entities. Due to these highly publicized governance failures, the role of Board of Directors in the implementation of corporate governance has been questioned. Their role has been the topic of interest. The main aim of this study was to assess the role of the Board of Directors in the implementation of Corporate Governance in the State Owned Entities in the Eastern Cape Province. It also aimed to determine the strategies and mechanisms that can be used to enhance the role played by the Board of directors in the successful implementation of corporate governance in the public entities. This research was qualitative in nature and as part of this approach data was gathered through questionnaires and interviews. For this study, small scale and manageable sample was used. The sample was selected with the view that all the participants selected were experienced and directly involved in the policy and decision-making as well as in implementation of corporate governance in the state-owned entities. The secondary data was collected through the audit reports, performance, and annual reports of the different public entities. The findings of this study revealed that some Board of Directors are unable to play the effective role in the implementation of corporate governance due to lack of experience and skills required. The research has also revealed that the Boards are not effective in their role due to lax in enforcing accountability by the shareholder. The findings on poor performance management of the Boards is because of no standardized performance management system for the Eastern Cape Province public entities in place. Political deployment of board members had an impact in the independency and objectivity of the boards. The study recommends the appointment of skilled and qualifying board members, training and induction of newly appointed be conducted. Development of accountability framework for all the boards of the public entities in the Eastern Cape. For the Boards to successfully play an effective role in the implementation of corporate governance, adequate budget should be allocated to the public entities. Lastly, the development of the standardized performance management system and framework with prescribed key responsibility areas for all the Boards of the state owned entities will assist the Boards in knowing what is expected of them.
- Full Text:
- Date Issued: 2019
- Authors: Makhala, Nombuyiselo
- Date: 2019
- Subjects: Corporate governance Directors of corporations
- Language: English
- Type: Thesis , Doctoral , D.Admin
- Identifier: http://hdl.handle.net/10353/13642 , vital:39687
- Description: Corporate governance is a well-recognized governing method, which ensures that the organization achieves its goals. This concept has received too much attention due to the number of reported corporate scandals in both public and private entities. Due to these highly publicized governance failures, the role of Board of Directors in the implementation of corporate governance has been questioned. Their role has been the topic of interest. The main aim of this study was to assess the role of the Board of Directors in the implementation of Corporate Governance in the State Owned Entities in the Eastern Cape Province. It also aimed to determine the strategies and mechanisms that can be used to enhance the role played by the Board of directors in the successful implementation of corporate governance in the public entities. This research was qualitative in nature and as part of this approach data was gathered through questionnaires and interviews. For this study, small scale and manageable sample was used. The sample was selected with the view that all the participants selected were experienced and directly involved in the policy and decision-making as well as in implementation of corporate governance in the state-owned entities. The secondary data was collected through the audit reports, performance, and annual reports of the different public entities. The findings of this study revealed that some Board of Directors are unable to play the effective role in the implementation of corporate governance due to lack of experience and skills required. The research has also revealed that the Boards are not effective in their role due to lax in enforcing accountability by the shareholder. The findings on poor performance management of the Boards is because of no standardized performance management system for the Eastern Cape Province public entities in place. Political deployment of board members had an impact in the independency and objectivity of the boards. The study recommends the appointment of skilled and qualifying board members, training and induction of newly appointed be conducted. Development of accountability framework for all the boards of the public entities in the Eastern Cape. For the Boards to successfully play an effective role in the implementation of corporate governance, adequate budget should be allocated to the public entities. Lastly, the development of the standardized performance management system and framework with prescribed key responsibility areas for all the Boards of the state owned entities will assist the Boards in knowing what is expected of them.
- Full Text:
- Date Issued: 2019
Assessing financial viability of selected urban and rural municipalities in the Eastern Cape
- Authors: Maclean, Sindisile
- Date: 2013
- Subjects: Finance, Public -- South Africa -- Eastern Cape , Municipal government -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Human services -- South Africa -- Eastern Cape , Municipal services -- South Africa -- Eastern Cape , South Africa -- Economic policy , South Africa -- Economic conditions
- Language: English
- Type: Thesis , Doctoral , PhD (in Public Administration)
- Identifier: vital:11661 , http://hdl.handle.net/10353/d1007093 , Finance, Public -- South Africa -- Eastern Cape , Municipal government -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Human services -- South Africa -- Eastern Cape , Municipal services -- South Africa -- Eastern Cape , South Africa -- Economic policy , South Africa -- Economic conditions
- Description: The purpose of the research is to assess the financial viability of selected urban and rural municipalities in the Eastern Cape. Municipalities that are not financially viable and sustainable will always struggle to deliver basic services to communities. Without sound financial management systems, municipalities will be forced to discontinue their operations. Municipalities, particularly small and rural ones, are not self-sufficient and often rely on grants and transfers to satisfy their immediate short-term goal of providing basic services to satisfy the needs of their communities. Therefore, finance is regarded as an overriding and decisive factor for determining the viability of municipalities. The study seeks to investigate the financial viability of selected urban and rural municipalities in the Eastern Cape. Its key research questions are: Are municipalities able to provide sufficient funds to provide a range of services at an acceptable service level? To what extent do municipalities rely on external funding? Do municipalities have revenue collection capacity and revenue policies? The study asserts that most municipalities lack the required financial resources. They depend mainly on transfers from Provincial Government and equitable share and conditional grants from National Government. Section 152 (1) of the Constitution of the Republic of South Africa, Act 8 of 1996, states, amongst other things, that Local Government should ensure the provision of services to communities in a sustainable manner. The constitution further states that a municipality must strive, within its financial and administrative capacity, to achieve its objectives. The Municipal Finance Management Act, Act 56 of 2003, creates a framework for municipalities to borrow money and determine the conditions for short- and long-term borrowing. The Act assigns clear roles and responsibilities to the various role players involved in local government financial management. According to the Act, an annual budget for a municipality may only be funded from realistically anticipated revenues to be collected. As revenue projections in the budget must be realistic, the Municipal Property Rates Act, Act 6 of 2004, facilitates the collection of revenue in municipalities and establishes a uniform property rating system across South Africa. Property tax is the biggest element of local government tax revenue and is central to municipal finance. The Municipal Systems Act, Act 32 of 2000, amongst its objectives, provides for the manner in which municipal powers and functions are exercised as well as establishes a simple framework for the core processes of planning, performance management and resource mobilisation. The Act also provides a framework for public administration and human resource development. Finally, it also empowers the poor and ensures that municipalities put in place service tariffs and credit control policies that take their needs into account. The research contends that, whilst there is legislation and structures to assist and direct municipalities, it has been established that municipalities do not properly collect rates and taxes due to them to augment their revenue. The study has shown nevertheless that metropolitan municipalities have the capacity to collect revenue for municipal services. This is confirmed by their collection rate which ranges between 94 % and 97 %. There is also the culture of non-payment by communities for services rendered by the municipalities. Rural municipalities are exempted from property tax, while other rural municipalities who have an urban component, have to collect. There is also the question of unemployment and poverty. Consequently, municipalities are not self-sufficient and rely on grants and equitable share to survive. As a result of this lack of self-sufficiency, it is difficult to implement service delivery and also difficult to attract skilled personnel. The study has investigated why some municipalities fail to collect revenue and depend on national grants. The study employed both qualitative and quantitative methods. The findings of the quantitative paradigm have been presented in the form of graphs and charts. The major findings include: All municipalities have limited borrowing capacity; have not exceeded their budgets in terms of their spending; small municipalities have households as their main contributor of revenue collected; metropolitan municipalities get the big slice of their revenue from business; small and rural municipalities rely on grants and transfers and are therefore not financially viable; metropolitan municipalities are, to a great extent, financially viable but lack skills and capacity to utilize their resources for effective service delivery; and all municipalities under-spend their budgets. The study, after elaborating on the findings, makes recommendations on how municipalities should become financially viable.
- Full Text:
- Date Issued: 2013
- Authors: Maclean, Sindisile
- Date: 2013
- Subjects: Finance, Public -- South Africa -- Eastern Cape , Municipal government -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Human services -- South Africa -- Eastern Cape , Municipal services -- South Africa -- Eastern Cape , South Africa -- Economic policy , South Africa -- Economic conditions
- Language: English
- Type: Thesis , Doctoral , PhD (in Public Administration)
- Identifier: vital:11661 , http://hdl.handle.net/10353/d1007093 , Finance, Public -- South Africa -- Eastern Cape , Municipal government -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Human services -- South Africa -- Eastern Cape , Municipal services -- South Africa -- Eastern Cape , South Africa -- Economic policy , South Africa -- Economic conditions
- Description: The purpose of the research is to assess the financial viability of selected urban and rural municipalities in the Eastern Cape. Municipalities that are not financially viable and sustainable will always struggle to deliver basic services to communities. Without sound financial management systems, municipalities will be forced to discontinue their operations. Municipalities, particularly small and rural ones, are not self-sufficient and often rely on grants and transfers to satisfy their immediate short-term goal of providing basic services to satisfy the needs of their communities. Therefore, finance is regarded as an overriding and decisive factor for determining the viability of municipalities. The study seeks to investigate the financial viability of selected urban and rural municipalities in the Eastern Cape. Its key research questions are: Are municipalities able to provide sufficient funds to provide a range of services at an acceptable service level? To what extent do municipalities rely on external funding? Do municipalities have revenue collection capacity and revenue policies? The study asserts that most municipalities lack the required financial resources. They depend mainly on transfers from Provincial Government and equitable share and conditional grants from National Government. Section 152 (1) of the Constitution of the Republic of South Africa, Act 8 of 1996, states, amongst other things, that Local Government should ensure the provision of services to communities in a sustainable manner. The constitution further states that a municipality must strive, within its financial and administrative capacity, to achieve its objectives. The Municipal Finance Management Act, Act 56 of 2003, creates a framework for municipalities to borrow money and determine the conditions for short- and long-term borrowing. The Act assigns clear roles and responsibilities to the various role players involved in local government financial management. According to the Act, an annual budget for a municipality may only be funded from realistically anticipated revenues to be collected. As revenue projections in the budget must be realistic, the Municipal Property Rates Act, Act 6 of 2004, facilitates the collection of revenue in municipalities and establishes a uniform property rating system across South Africa. Property tax is the biggest element of local government tax revenue and is central to municipal finance. The Municipal Systems Act, Act 32 of 2000, amongst its objectives, provides for the manner in which municipal powers and functions are exercised as well as establishes a simple framework for the core processes of planning, performance management and resource mobilisation. The Act also provides a framework for public administration and human resource development. Finally, it also empowers the poor and ensures that municipalities put in place service tariffs and credit control policies that take their needs into account. The research contends that, whilst there is legislation and structures to assist and direct municipalities, it has been established that municipalities do not properly collect rates and taxes due to them to augment their revenue. The study has shown nevertheless that metropolitan municipalities have the capacity to collect revenue for municipal services. This is confirmed by their collection rate which ranges between 94 % and 97 %. There is also the culture of non-payment by communities for services rendered by the municipalities. Rural municipalities are exempted from property tax, while other rural municipalities who have an urban component, have to collect. There is also the question of unemployment and poverty. Consequently, municipalities are not self-sufficient and rely on grants and equitable share to survive. As a result of this lack of self-sufficiency, it is difficult to implement service delivery and also difficult to attract skilled personnel. The study has investigated why some municipalities fail to collect revenue and depend on national grants. The study employed both qualitative and quantitative methods. The findings of the quantitative paradigm have been presented in the form of graphs and charts. The major findings include: All municipalities have limited borrowing capacity; have not exceeded their budgets in terms of their spending; small municipalities have households as their main contributor of revenue collected; metropolitan municipalities get the big slice of their revenue from business; small and rural municipalities rely on grants and transfers and are therefore not financially viable; metropolitan municipalities are, to a great extent, financially viable but lack skills and capacity to utilize their resources for effective service delivery; and all municipalities under-spend their budgets. The study, after elaborating on the findings, makes recommendations on how municipalities should become financially viable.
- Full Text:
- Date Issued: 2013
An investigation of persistence of rural poverty in South Africa: the case of O.R. Tambo district municipality
- Authors: Kongwa, Kekelwa Samuele
- Date: 2012
- Language: English
- Type: Thesis , Doctoral , PhD (Social Science Dev)
- Identifier: vital:11443 , http://hdl.handle.net/10353/d1007577
- Description: The purpose of this study was an investigation of the reasons for persistent poverty and low level of economic growth and development in the OR Tambo district municipality of the Eastern Cape Province since the advent of democracy in South Africa. To accomplish this objective, a case study of the OR Tambo district municipality was undertaken within the concept of development, seeking to answer three research questions: What are the factors that explain the persistence of poverty in the OR Tambo district municipality? Why is the OR Tambo district municipality the most exposed to poverty in relative and absolute terms? What have state poverty intervention strategies done to alleviate poverty in the OR Tambo district since the advent of democracy in South Africa? Mainly qualitative data collection methods, involving in-depth semi-structured interviews, textual and document analyses, focus group discussions and observations were employed to answer the research questions. A purposive sampling of nineteen participants, supplemented by three focus groups, was selected. The macro-level case study design was supplemented by micro-level documentary evidence on poverty and development. From the synthesised findings of the investigation, twelve causal factors were identified as responsible for persistent poverty and low level of economic growth and development in the OR Tambo district. These included political neglect, agricultural neglect, poor infrastructure, corruption, poor service delivery, poor quality of natural resources, brain drain, migrant labour system, culture of tolerance and conservatism, culture of dependence, no long-term development strategy and globalisation.
- Full Text:
- Date Issued: 2012
- Authors: Kongwa, Kekelwa Samuele
- Date: 2012
- Language: English
- Type: Thesis , Doctoral , PhD (Social Science Dev)
- Identifier: vital:11443 , http://hdl.handle.net/10353/d1007577
- Description: The purpose of this study was an investigation of the reasons for persistent poverty and low level of economic growth and development in the OR Tambo district municipality of the Eastern Cape Province since the advent of democracy in South Africa. To accomplish this objective, a case study of the OR Tambo district municipality was undertaken within the concept of development, seeking to answer three research questions: What are the factors that explain the persistence of poverty in the OR Tambo district municipality? Why is the OR Tambo district municipality the most exposed to poverty in relative and absolute terms? What have state poverty intervention strategies done to alleviate poverty in the OR Tambo district since the advent of democracy in South Africa? Mainly qualitative data collection methods, involving in-depth semi-structured interviews, textual and document analyses, focus group discussions and observations were employed to answer the research questions. A purposive sampling of nineteen participants, supplemented by three focus groups, was selected. The macro-level case study design was supplemented by micro-level documentary evidence on poverty and development. From the synthesised findings of the investigation, twelve causal factors were identified as responsible for persistent poverty and low level of economic growth and development in the OR Tambo district. These included political neglect, agricultural neglect, poor infrastructure, corruption, poor service delivery, poor quality of natural resources, brain drain, migrant labour system, culture of tolerance and conservatism, culture of dependence, no long-term development strategy and globalisation.
- Full Text:
- Date Issued: 2012
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