Original Research

A sustainable differentiated funding model for South African district municipalities

Lindokuhle B.G. Manuel, Lourens J. Erasmus
Journal of Local Government Research and Innovation | Vol 5 | a163 | DOI: https://doi.org/10.4102/jolgri.v5i0.163 | © 2024 Lindokuhle B.G. Manuel, Lourens J. Erasmus | This work is licensed under CC Attribution 4.0
Submitted: 07 September 2023 | Published: 07 February 2024

About the author(s)

Lindokuhle B.G. Manuel, Department of Financial Governance, School of Applied Accountancy, College of Accounting Sciences, University of South Africa, Pretoria, South Africa
Lourens J. Erasmus, Department of Financial Governance, School of Applied Accountancy, College of Accounting Sciences, University of South Africa, Pretoria, South Africa

Abstract

Background: South African district municipalities supply, inter alia, basic social goods in order to realise socio-economic rights and promote sustainable development in their local communities. This requires adequate funding, which may be in the form of own generated revenue and intergovernmental transfers. However, despite legislated functions, many district municipalities are regarded as financially distressed and unable to deliver on their constitutional mandates.

Aim: This study sought to develop a sustainable differentiated funding model for district municipalities that will enable them to deliver on their constitutional mandates.

Methods: This empirical study followed a positivist paradigm and used questionnaires to solicit the views of selected municipal officials from all district municipalities on the efficacy of the current funding model against the key principles that underpin a successful funding framework for South African municipalities.

Results: The results of this study indicated that the funding district municipalities receive and generate is not in line with their constitutional mandates, which in turn, negatively affects their financial condition. Thus, there is a necessity to reconstruct the current funding model.

Conclusion: This study recommends a clear specification of C1 and C2 district municipal powers and functions, and that the current funding model change from applying a blanket approach and rather consider the different geographical areas and circumstances for C1 and C2 district municipalities.

Contribution: This empirical study contributes to the broader body of scientific knowledge on the local government financial governance by addressing the funding model for South African district municipalities in a practical manner.


Keywords

basic social goods; constitutional mandates; financial condition; funding model; municipal revenue; socio-economic development; South Africa; sustainable development.

JEL Codes

H49: Other

Sustainable Development Goal

Goal 3: Good health and well-being

Metrics

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