The belief that all municipalities can fund themselves masks a stark reality: for many rural municipalities, the struggle to raise revenue is built into the system itself.
 

Author:

T Chonco-Spambo
 

Summary:

This article looks at fees as an alternative source of revenue for local governments in South Africa. It explores three primary ways of financing municipalities. It then discusses the financing of municipal services, with a focus on the importance of fees. Comparators of rural municipalities versus urban municipalities are used throughout the article to show how varied these two types of municipalities perform when raising their own revenue, are allocated their share of nationally raised revenue (the local government equitable share) and in how they receive financing for territorial actions. The comparators show that poor, rural municipalities get the shorter end of the stick across the fiscal framework. The article adopts a descriptive research approach coupled with an evaluative conclusion. It finds that the general statement that local government has extensive revenue-raising powers often hides the huge disparities in revenue generation among municipalities in South Africa and creates the perception that all municipalities are self-sufficient. The article, thus, advocates for a bigger focus to be given to assisting municipalities to leverage their revenue-raising powers, specifically that of collecting fees, as opposed to dependence on the equitable share as an equalization mechanism.


Link to book chapter