Abstract
Background: Local structures or institutions are widely regarded as crucial agents in the redistribution of financial resources that are key to local economic development (LED) in municipalities within developing countries. Despite this, the gap between public finance legislation (which needs local structures for its implementation) and LED persist in developing countries.
Aim: The article aims to understand how municipalities from developing countries may narrow the gap between public finance legislation and LED. This article focusses on the Ulundi Local Municipality in northern KwaZulu-Natal, South Africa (a developing country with a constitutional democracy) to extract relevant lessons for developing countries.
Methods: Following a qualitative research method, primary data in this study were collected through semi-structured interviews and secondary data through relevant reports and literature.
Results: The findings reveal that a combination of dereliction of duty, local structures’ lack of capacity and political will is responsible for the gap between public finance legislation and LED in Ulundi Local Municipality.
Conclusion: It is concluded that the gap between public finance and LED renders public finance legislation ineffective towards LED in the developing countries’ municipalities.
Contribution: The suggestions on the process to narrow the gap identified are drawn from Ulundi Local Municipality stakeholders with the guide from both the Sustainable Livelihoods Framework (SLF) and the Institutional Theory.
Keywords: municipalities in developing countries; local economic development; local structures; public finance legislation; sustainable livelihoods framework; institutional theory.
Introduction
Van Niekerk and Sebakamotse (2020) posit that no government department or institution ‘can deliver effective services and fulfil its constitutionally mandated development role without enough financial resources’. Farisani (2023), Smyth and Vinclay (2017) corroborate and assert that globally there is a strong relationship between public finance legislation and local economic development (LED). They further argue that such a relationship needs further research in developing countries. Khomo, Farisani and Mashau (2023) corroborate citing the Sustainable Livelihoods Framework’s (SLF) approach in guiding the process to ensure local livelihoods are sustained as a result of well-planned implementation of policies. Matloga, Mahole and Nekhavhambe (2024) point out that well-planned implementation of policies is a direct result of the collaboration of all stakeholders that is collaboration of national and local stakeholders in ensuring relevant resources (especially financial resources) are released to relevant local structures such as small medium and micro enterprises (SMMEs) and non-governmental organisations (NGOs) that often create jobs and make LED possible in remote areas in developing countries. Nevertheless, despite all the above-stated correct diagnoses by various authors, none of them provide solutions that would narrow the gap between public finance legislation and LED in developing countries.
Farisani (2022c) attests to the role of local SMMEs and NGOs in acting as bridges between national institutions and their policies for local structures or stakeholders as presented in SLF (see Figure 1) — acting as bridges to ensure financial resources reach local structures that are well placed to create jobs and grow the local economy. The author (Farisani) further points out that without the active and leading role of local government, the movement of financial resources from national institutions to local structures would be impossible. Scott (2008) affirms and points to Institutional Theory’s cultural cognitive element. The cultural cognitive element assists in understanding the relationships between different institutions. Palthe (2014) echoes Scott’s (2008) view and posits that local stakeholders need to be persuaded to be supportive of any initiative or policy by the external stakeholders (such as the national government department) for the initiative to be successful. Palthe (2014) lays bare the need for such persuasion pointing to the effect such persuasions have on the behavioural reasoning of the local stakeholders to want to participate (see Table 1) in national policy initiatives that provide financial resources (through national departments) for LED projects in the area.
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FIGURE 1: The sustainable livelihoods framework. |
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| TABLE 1: Comparison between regulative, normative and cultural cognitive elements of institutional theory. |
The study aims to understand how developing countries may narrow the gap between public finance legislation and LED in developing countries. To understand how developing countries may narrow this gap this study used Ulundi Local Municipality in South Africa as the case study. Ulundi Local Municipality is one of the many municipalities in South Africa that has alarming unemployment and poor economic development despite South Africa’s widely praised policies and constitution. The Lundi Local Municipality Integrated Development Plan (IDP) 2024 cites South African Statistics (2015) and states that more than half of the population (50.4%) within the municipality is dependent on some form of grant and subsidy and highlights a need for investors and initiatives within the local domain to help create employment opportunities spread across the municipality. South African public finance legislation recognises and emphasises local stakeholders’ involvement to accelerate service delivery to the local citizens. The Municipal Finance Management Act (MFMA) 56 of 2003 sets out to secure sound and sustainable management of the financial affairs of municipalities and other institutions in the local sphere of government and establish treasury norms and standards for the local sphere of government. Furthermore, the Public Finance Management Act (PFMA) No. 1 of 1999 ensures that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively to provide for the responsibilities of persons entrusted with financial management in those governments. The abovementioned Acts open the affairs of the municipality to the people it serves. Therefore, the following three objectives are pursued to achieve the aim of the study: to identify the key structures responsible for the management of the Local Municipality’s public finances; to assess the gap between the public finance legislation and LED and finally, to suggest the viable processes to eliminate the financial legislation gap between relevant structures and LED.
Theoretical framework
The study adopted the Institutional Theory framework primarily because it emphasises understanding organisational and managerial practices as products of social rather than economic pressures (Suddaby 2013). Unlike economic rationality, which focusses on cost-benefit analysis, Institutional Theory seeks to explain organisational behaviours through the lens of societal norms and values. This perspective is particularly relevant to service delivery and government entities, which are primarily designed to serve the public regardless of economic status.
While economic considerations are not entirely excluded (because municipalities still need to generate revenue to fund LED projects), the Institutional Theory highlights the importance of social obligations. It provides a framework for understanding how public officials manage finances intended to benefit their communities. Through people-first decision-making, the theory aligns public service objectives with ethical governance.
The literature on Institutional Theory identifies six key concepts: infusion of value, diffusion, rational myths, loose coupling, legitimacy and isomorphism. These concepts help explain organisational dynamics, particularly in contexts such as public finance management (PFM), where corruption is a significant concern. Lawrence and Shadnam (2008) notice that this theory is crucial as it encourages actions that depart from costly social orders. Such departures impose controls that may increase costs through higher risks, greater cognitive demands, or reduced legitimacy and the associated resources because of non-conformity. This is important in economies plagued by corruption.
Public finance management refers to the laws, rules and processes that govern how public authorities finance their activities, allocate funds and account for results. The regulatory framework for municipal financial management is primarily outlined in the MFMA 56 of 2003 and the PFMA No. 1 of 1999. The purposes of these Acts have been detailed earlier in the Introduction section.
This section elaborates on the roles and responsibilities of various entities under these Acts, including the National and Provincial Treasuries, municipal councils, mayors, municipal managers and chief financial officers, all of whom operate under the following mandate:
To identify the key structures responsible for the management of local municipalities’ public finances, we review the structures and their underlying legislation according to the SFL guidelines. To assess the gap between the public finance legislation and local economic development we continue to borrow from the SLF approach. Finally, to suggest viable processes to eliminate the legislation gap between relevant structures and LED, we borrow from both the SLF and the Institutional Theory.
Sustainable Livelihoods Framework will be key in suggesting the process, while the Institutional Theory will be pivotal in suggesting the kind of relationships or collaborations that would assist in reducing the gap between the financial legislation and the LED.
As already elaborated, Matloga et al. (2024); Khomo et al. (2023) posit that well-planned implementation of policies is a direct result of the collaboration of all stakeholders. Farisani (2022a) affirms and points out that without the active and leading role of local government, the movement of financial resources from national institutions to local structures would be impossible. Smyth and Vanclay (2017) corroborate and highlight the use of social resources (Figure 1) by relevant structures or stakeholders in the collaboration processes that lead to unlocking financial resources needed for the LED and sustainability of local livelihoods. Thus, a close examination of the SFL shows that there has to be a clear and deliberate good use of social resources (such as political meetings) and human resources (situated in various local government positions, structures or offices) to unlock and manage the financial resources to enable LED. What follows is the review of offices or structures that are well placed within the municipality as per the relevant legislation. As per the relevant legislation to release the social and human resources that are significant in releasing and managing financial resources that are key in LED and sustainability of local livelihoods.
Key structures responsible for the management of the local municipality’s public finances
The local council plays a critical role in managing local municipality’s public finance. The council structure comprises the mayor, deputy mayor, executive committee, Speaker, chief whip, ward committee and portfolio committees. What follows is a summary of their respective functions and the underpinning legislation to the office or structure.
Mayor
The executive mayor is a member of the council who assumes the position after the council has elected them, together with the deputy and the Speaker. The mayor is then tasked with the responsibility of appointing the mayoral committee from among the council members. The Municipal Service Analysis (2000) provides the mayor with executive powers.
According to the MFMA (2003), financial oversight by the executive mayor means involvement in all managerial activities associated with improving service delivery to the local community. The mayor must, according to the MSA, appoint and work alongside a municipal manager to prepare the budget and write the council’s oversight report.
The mayor is to provide guidance on the fiscal and financial affairs of the municipality and oversee the preparation and implementation of the annual and quarterly budgets. This is achieved through policy formulation, political guidance and advice given to the chief financial officer, municipal manager and executive committee.
Deputy mayor
The deputy mayor is elected alongside the executive committee of the municipal council, with the approval of the Member of Executive Council (MEC) for local government in the province, in line with Section 48 of the MSA (1998). The deputy is a member of this committee and stands in for the mayor, exercising the powers and duties of the mayoral office if the mayor is absent or if the office is vacant. Furthermore, the mayor may delegate duties to the deputy mayor.
Executive committee
Executive committees, as regulated by Section 42–53 of the Municipal Structures Act (MSA), 1998, are appointed by the mayor and are accountable to both the mayor and municipal council. Each member conducts his or her portfolio committee, which submits a report to the executive committee. This committee then compiles an executive report from this feedback and submits it to the municipal council (Khalo 2013). The functions of the executive committee are specific to the municipality and include the monitoring of the provision of services to the municipal community in a sustainable manner. The municipal executive committee, as the employer of the municipal manager, oversees both the executive and the administration, but the MFMA (1998) prohibits any interference by the mayor or executive committee in the fiscal management responsibilities of the municipal manager – even though these parties are allowed to monitor any assigned responsibilities (Khalo 2013). The executive committee takes part in decision-making for the local government. Furthermore, both the MFMA (2003) and MSA (1998) state that the executive committee must inform the municipal council of all the decisions that it has taken. Therefore, according to the South African Local Government Association (SALGA) (2012), the municipal council must hold the executive accountable because of the separation of powers between the executive and the legislative authority.
Speaker
The Speaker is a full-time member of the council, elected in terms of Section 36 of the MSA, to be the chairperson of the municipality council, as stipulated in Section 160 (1)(b) of the Constitution. This implies that the Speaker is the bearer of political office because he or she has been elected. Section 53 of the MSA (2000) stipulates the role of political office bearers, while Section 37 of the MSA (1998) provides the Speaker’s function – to ensure the accountability, integrity and disciple of councillors and the office, and arrange council meetings and ensure their orderly running. The Speaker holds a key office in terms of ensuring oversight, as he or she chairs the platforms at which the executive committee accounts for its actions and is responsible for distinguishing between political and administrative activity.
Chief whip
The Office of the Whip of Council must be held by an elected full-time council member, as required in the MSA (2000). The Chief Whip’s office is responsible for the political management of council meetings and for ameliorating any political differences in the council to ensure that debates run smoothly. The Chief Whip further sees effective communication between council members in meetings called by the Speaker and advises both the Speaker and mayor about the council agenda, based on issues raised by the political parties, thus ensuring a tabling of motions. The Chief Whip ensures councillors’ familiarity with the code of conduct and that they are represented fairly in the standing committees according to their parties (Madue 2013).
Ward committee
Ward committees, comprising ward members, represent a vital link in the local government system between the municipal council and its local community. By participating in these committees, the local Lundi community can understand the vision and objectives of their municipality and participate in any Lundi Local Municipality IDP hearing. Active participation by the public in municipal matters highlights the third leg of the municipality – the community – which is a very important stakeholder within the municipality.
The relationship between the municipality – represented by the ward councillor – and the community is fostered by ward committees, which make recommendations on matters affecting the ward to the ward councillor – or through the councillor to the municipal council, executive committee or executive mayor. The ward committees ensure active community participation in the solving of pressing matters, thus ensuring that proactive decisions are made about spending municipal budgets.
Chief financial officer
The chief financial officer (CFO) is responsible for a company’s financial concerns. The CFO is also in charge of managing, controlling and leveraging the finance department’s budget. Section 81 (1) (a) of the MFMA (2003) articulates that a CFO is responsible for administering the company treasury and budget. In addition, the CFO ensures that the accounting officer performs his or her financial management duties – in areas ranging from preparation of budget to financial reporting and improvement, and securing internal control procedures and policies. Moreover, the CFO is responsible for implementing financial reforms in the accounting office, with assistance from skilled financial staff within the municipality. The MFMA (2003) mentions that the CFO must form the top management team reporting to the municipal manager, with senior managers required to hold head-of-department positions.
The gap between public finance legislation and local economic development
As already discussed briefly, among the most compelling South African public finance legislation to recognise the relationship of all stakeholders to participate in distributing the financial resources of the country are the 1996 South African Constitution, Municipal Systems Act no 32 of 2000, section 4(8) Municipal Structures Act of 1998 and the MFMA no 56 of 2003. These public finance legislations rightly point to the need for the public structures identified in this study to communicate and work with all relevant stakeholders to ensure there is effective service delivery in local municipalities. However, Ssekitoleko and Du Plessis (2021) and Mahadea and Kaseeram (2018) posit that there is a gap between developing countries’ public finance legislation and LED. Ssekitoleko and Du Plessis (2021) and Mahadea and Kaseeram (2018) also point to high unemployment rates, inequality and poor economic growth, especially in rural areas. Gasela (2022) affirms the gap highlighting the poor role of key municipal structures in developing countries.
The SLF (Figure 1) is well placed to assist in understanding the gap between developing countries’ public finance legislation and LED. Toner and Franks (2006) attest and explain how SLF’s approach has been used successfully by different authors and practitioners to understand the gap between policies of different structures and their intended goals to sustain livelihoods and other regional institutions or stakeholders that serve the same goal as they do. Smyth and Vanclay (2017) corroborate and point to the chain of events and movement of financial resources as a result of policies of key structures or institutions committed to sustaining local livelihoods in developing countries.
Khomo et al. (2023) argue that in the SLF asset base, financial resources are the most cited type of resources as a reason for strong regional economic developments. Strong regional economic developments lead to growth of local enterprises in developing countries that in turn create jobs. Khomo et al. (2023) and Ramabodu, Mashau, and Farisani (2024) affirms and posits that economic development in regional economies is tied to the injection of financial resources as a result of relevant structures leading to local development in the process as shown in Figure 1. The process of supplying relevant resources to regional structures is responsible for LED and sustaining local livelihoods in developing countries. Thus, the role of narrowing the gap between public financial legislation and livelihood structures lies squarely on the shoulders of responsible municipal structures in developing countries.
Processes to eliminate the legislation gap between relevant structures and local economic development
Palthe’s (2014) explanation (see summary in the form of Table 1) of Institutional Theory’s regulative and socio-cognitive elements gives insight into the processes of eliminating the undesirable legislation gap between relevant structures and LED in developing countries. Palthe (2014) draws our attention to the change in the behavioural reasoning of structures and institutions based on the approach of either regulative or socio-cognitive elements. Scott (2013) explains that the key to narrowing the gap between negative behavioural reasoning of key regional structures or institutions is shedding light on their social identity and personal desire instead of the regulative element’s approach of fear and coercion. Thus, narrowing the gap between the public finance regulations and LED has to do with the cognitive approach of the relevant municipality’s structures (as identified earlier).
Farisani (2022c) echoing Scott (2013) explains that the correct interplay of regulative and socio-cognitive elements is key to LED. Farisani’s (2022c) argument highlights the need for the municipal structures and national structures to pay careful attention to socio-cognitive aspects such as local values, beliefs and assumptions to gain local support in narrowing the gap between the legislation and LED.
Research methods and design
This section outlines the research methodology and details how empirical data were collected and analysed. The study employs a qualitative approach, using interviews as the primary method of data collection. This methodology is designed to explore the gap between public finance legislation and LED by drawing on insights from municipal officials. The study is grounded in the interpretive paradigm described by Creswell (2013), which emphasises understanding individuals’ perceptions of their environments. Specifically, it investigates municipal councillors’ understanding of their roles and capacities in exercising oversight within local government. Analysing responses to interview questions, the researchers interpret participants’ understanding and how their roles align with the municipality’s LED objectives. The research involved diverse perspectives from 47 Ulundi Local Municipality officials with oversight responsibilities, who were interviewed face-to-face. To provide a broader context, insights from scholarly articles were also integrated. The literature review highlights advancements in this research area, situating the case of Ulundi municipality within the broader narrative of public finance and LED.
Data collection targeted individuals holding specific roles within the municipality. The researcher employed purposive sampling, a method within the scope of non-probability sampling, to intentionally select respondents capable of providing relevant insights. As Baker et al. (2012) explain, purposive sampling reflects the characteristics of the targeted population, ensuring that the data align with the research objectives. Edmonds and Kennedy (2016:26) further support this approach, noticing that participants are chosen based on specific criteria related to the research objectives, design and population. This method is particularly suited to qualitative research, where depth and relevance of insights are prioritised.
The researcher employs the qualitative data analysis process as proposed by Maree (2007). According to Maree, the examination of qualitative research notes begins in the field during interviews and observations, or both. Concurrently, the researcher identifies issues and concepts that may aid in understanding the situation. Reading the notes and transcripts is a crucial step in the analytical process. The interviews were transcribed into written form using an audio recording device, resulting in a document for each respondent. Subsequently, the text of each interview was colour-coded to identify common aspects and key issues as they emerged. To achieve data trustworthiness (i.e., credibility, dependability, conformability and transferability), the colour-coded text was grouped on a large board, facilitating the identification of responses that aligned with the established themes. In the final analysis, the researcher endeavoured to thoroughly understand and explain these themes.
The findings from the interviews in this study were compared with those of other scholars identified in the literature review. This approach, which aligns with Sekaran and Bougie (2009), ensures credibility, dependability, confirmability and transferability. Haq et al. (2023) and Lincoln and Guba (1985) further emphasise the significant relationship between confirmability and dependability. To address dependability directly, it was essential for the researcher to report the procedures and findings clearly and comprehensively, thereby enabling other researchers to achieve transferability.
Ethical considerations
An application for full ethical approval was made to the University of KwaZulu-Natal and ethics consent was received on 17 September 2019. The ethics approval number is HSSREC/00000187/2019. Participants signed consent forms and participated voluntarily. The anonymity of the respondents was protected in the writing of this article, and participants were assured of this beforehand.
Findings and analysis
The findings and analysis are presented based on the aim of the study: To understand how developing countries may narrow the gap between public finance legislation and LED in developing countries. As such, the findings and analysis of this article are presented under three headings: Key structures responsible for the management of Local Municipality’s public finances. The gap between the public finance legislation and LED and the processes to eliminate the legislation gap between relevant structures and LED.
Key structures responsible for the management of local municipality’s public finances
Table 2 provides a summarised account of findings as experienced by the majority of the respondents when reflecting on the work of the Ulundi Local Municipal structures and their empowering legislation. Thus, the table is meant to provide the reader with a clear and easy way to understand South African Local Municipality’s key structures, their relevant legislation, roles, experiences of the respondents and relevant documents. As already mentioned, South Africa is a developing country and Ulundi is the Local Municipality in South Africa where data were collected.
| TABLE 2: Local municipality’s key structures, their relevant legislation, roles and findings. |
Table 2 reveals that structures in this municipality of South Africa are detached from their constituents and governing legislation. Respondent A points to the incapacity of the office bearers of the structures empowered to interpret the legislation in a way that translates to the correct channelling of financial resources and other resources that are key to LED. Respondent A argues that the ‘challenge is understanding and interpretation of legislation and reports which are served before council’ by councillors. What follows is the presentation of the findings and analysis of the second objective, which is the gap between the public finance legislation and LED.
The gap between public finance legislation and local economic development
Table 2 shows that the availability of various sections in the South African Constitution, MFMA and MSA did not translate into LED because relevant structures are not acting in the manner that they are intended by the drafters of the public finance legislation. The huge financial oversight role assigned to various structures to bring about LED is not properly understood or acted upon by the councillors who occupy these structures, presented in Table 2, because of dereliction of duty. Respondent C asserts that the majority of councillors do nothing to ensure all resources of the municipality are being maximised to give excellent services to the citizens.
Respondent C asserts that the councillors do nothing other than merely ‘approving policies’. Respondent B attests to the sentiment expressed by Respondent C and adds that another sign of such dereliction of public finance legislation is when ‘the reports are accepted without any deliberation’ by the ruling party through the use of the power vested in the Speaker of the Local Municipality. Thus, instead of the power of the Speaker and Chief Whips of the majority to be used as anticipated in the legislation, presented in Table 2, it is being used to enable the relevant offices within the municipality to avoid accounting on financial matters that come before the council for oversight purposes and LED. While the councillors of the ruling party acknowledge the link between effective financial oversight and LED, they point out that they have other priorities that they consider more important. Respondent D admits that ‘we need to protect the image of the party’. Such admission by Respondent D shows that the ruling party is aware of its abuse or weakening of structures of the Local Municipality to protect their comrades from accounting as per the relevant public finance legislation intended.
Processes to eliminate the legislation gap between relevant structures and local economic development
When the conduct of the relevant structures in Table 2 is considered in light of their responsibilities as per the public finance legislation, it becomes clear that relevant intervention is needed to change the status quo. Respondent B suggests that there has to be a change in the induction process of the councillors in South Africa. Respondent B argues that ‘the duration of the training provided (induction), which is a once-off in the 5-year term is not sufficient’. He posits that change will benefit the new councillors and that change will be seen when the councillors lead key structures or when they occupy powerful offices such as the office of the Speaker. The Speaker is elected by the council from councillors elected to the council by the community. Respondent A affirms and points to a lack of ‘understanding and interpretation of legislation and reports which are served before council’.
Discussion, implementations and recommendations
The discussion of the findings and analysis of this article is presented under three headings: Key structures responsible for the management of Local Municipality’s public finances; the gap between the public finance legislation and LED; and the recommended processes to eliminate the legislation gap between relevant structures and LED.
Key structures responsible for the management of local municipality’s public finances
Table 2 reveals that South Africa has all the relevant public finance legislation and Local Municipality’s key structures in place that the developing country needs to guide the conduct of relevant stakeholders in key structures or offices responsible for local financial oversight and LED. Smyth and Vanclay (2017) corroborate and further explain that sustainable LED is only possible when key structures and policies are in place to influence the release of resources needed for the sustainability of livelihoods and LED. Farisani (2022b) affirm and points to DFID’s (1999–2001) SLF diagram (Figure 1), which shows that structures are influenced and in turn influence the provision of resources (including financial resources) in the lead-up to the LED.
A careful reading and analysis of key structures and their roles as per the public finance legislation (Table 2) also show that there is a poor relationship between the key structures and the community they need to serve. This poor relationship is more visible when the link between the ward committees and the communities they serve is evaluated. Scott (2013) posits that there cannot be LED in such circumstances where there is a poor link between the community and the local communities. Palthe (2014) corroborates and points out that the success of key structures in developing countries lies in changing the behavioural reasoning of local communities from having to participate to wanting to participate (see Table 1). Farisani (2022b) echoes Palthe (2014) and argues that for financial resources to reach the relevant local communities in developing countries, the relationship between the relevant stakeholders has to be cultivated in advance.
The gap between public finance legislation and local economic development
Sustainable Livelihoods Framework (see Figure 1) clearly show that the gap between the public finance legislation and LED arises when there is a disjuncture between structures, their policies and actions. Farisani (2022c) attests citing the flow of financial resources to sustainable livelihood strategies in response to the actions of leaders in key structures. The findings show that indeed key structures responsible for financial oversight within the Ulundi municipality in South Africa have been sleeping on the job, that is dereliction of duty. The findings are consistent with that of Ssekitoleko and Du Plessis (2021) and Mahadea and Kaseeram (2018) who elaborate on the gap between developing countries’ public finance legislation and LED. Matloga et al. (2024) as well as Khomo et al. (2023) affirm and point out that well-planned implementation of policies is a direct result of the collaboration of all stakeholders. Khomo et al. (2023) went on to argue that collaboration of national and local stakeholders ensures that relevant resources (especially financial resources) are availed to relevant local structures such as SMMEs and NGOs who often create jobs and make LED possible in far-flung areas in developing countries.
As already discussed throughout this article, South African public finance legislation such as the 1996 South African Constitution Chapter 13, Section 213-230A, Municipal Systems Act no 32 of 2000 in Chapter 9, section 4(8) Municipal Structures Act of 1998 and the Municipal Financial Management Act no 56 of 2003 are clear on what needs to be done by key structures. However, the findings point to what is likely to be a dominant concern among those in leadership positions. The findings and analysis reveal that leaders were more concerned about protecting their political parties rather than the financial oversight as per the various legislation governing their offices or structures they lead. Sustainable Livelihoods Framework approach (see Figure 1) shows that the protection of political comrades by key Local Municipality structures in developing countries is effectively acting against the intended flow of financial resources that enable LED.
Processes to eliminate the legislation gap between relevant structures and local economic development
The discussion of the findings and analysis in line with SFL and Institutional Theory has shown that indeed developing countries need to come up with a legitimate route that could not be easily blocked by individual stakeholders from one party alone. Palthe’s (2014) simplification in the form of a table (see Table 1) of Institutional Theory’s regulative and socio-cognitive elements provides a guide to the processes to eliminate the undesirable legislation gap between relevant structures and LED in developing countries.
Scott (2013) echoes Palthe (2014) and explains that the correct interplay of regulative and socio-cognitive elements is key to LED. Thus, the correct interplay of regulative and socio-cognitive elements must be community-led and not local municipality led who are appointees of one party. Matloga et al. (2024) and Farisani (2022a) corroborate citing the need for local community structures that are not elected such as traditional leaders, NGOs, business communities and other social organisations that have legitimate interests in LED. Legitimate social organisations such as local agricultural or loaning societies have good reputations within their local communities. Khomo et al. (2023), Farisani (2022c) and Scott (2008) affirm and point out that local community organisations are the real guardians of local values, beliefs and assumptions, and hence their vested ability to close the gap between the public finance legislation and LED by one political party or stakeholder with an ulterior motive. The suggested approach is also consistent with SLF (see Figure 1) because of its processes that give structures the transforming role. Thus, it is through the active participation of local transforming structures in developing countries that the implementation of public finance could be made to lead towards LED.
Conclusions
The article aimed to understand how developing countries may narrow the gap between public finance legislation and LED in developing countries by examining the role of local structures or institutions as public finance legislation agents that are instrumental in the redistribution of financial resources that are key to LED in developing countries. This article focusses on the Ulundi Local Municipality in northern KwaZulu-Natal, South Africa (a developing country with a constitutional democracy), to extract relevant lessons for developing countries.
The findings reveal that a combination of dereliction of duty, local structures’ lack of capacity and political will is responsible for the gap between public finance legislation and LED in developing countries. It is concluded that the gap renders public finance legislation ineffective towards LED in developing countries.
It is recommended that to narrow the gap identified, local community structures that have not shown political interest or favouritism to a political party must be encouraged to take a leading role in transforming the implementation process. The recommendation is consistent with the SLF and the Institutional Theory. It is also recommended that studies that have more data from other municipalities in developing countries (both urban and rural) in other continents be studied to enrich the lessons for implementing public finance legislation in developing countries.
Acknowledgements
This article is partially based on S.M.K.’s thesis entitled ‘Assessing the role and capacity of municipal councillors in the execution of their financial oversight responsibility at local government: The case of Ulundi Local Municipality’ towards the degree of Masters of Commerce in Leadership Studies, University of KwaZulu-Natal in 2019, with supervisor Prof. Pfano Mashau.
Competing interests
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
Authors’ contributions
S.M.K. collected the data, analysed and wrote the article. P.M. supervised the article and contributed to the writing and editing. T.R.F. extracted, analysed and did the final write up. S.M.K., P.M. and T.R.F. approved the final accepted version for publication.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study and findings are available from the corresponding author, T.R.F., upon reasonable request.
Disclaimer
The views and opinions expressed in this article are those of the authors and are the product of professional research. The article does not necessarily reflect the official policy or position of any affiliated institution, funder, agency or that of the publisher. The authors are responsible for this article’s results, findings and content.
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