The effect of good working capital policy on exploiting the fiscal capacity of municipalities in KZN

Abstract

With the advent of the Municipal Management Finance Management Act, (Act 56 of 2003), working capital issues have been legislatively forced onto managers’ daily agenda. Municipal finance officials have been given a clear mandate to focus greater attention on issues such as debt and cash management and stricter policies relating to short term credit financing. The MFMA allows for the unlocking of the fiscal powers of a municipality to generate its own income.

Research objectivesThisresearch is intended as a pilot study that argues greater focus on and improvement of, working capital procedures would assist a municipality to exploit this fiscal capacity. Other objectives include: - Generate greater interest in this topic amongst researchers. - Identify factors that limit the implementing good working capital policy. - Identify factors the affect the income earning ability of municipalities. - Identify possible best practices benchmarking.