Barriers to revenue collection affecting municipal financial viability : a case of Maruleng Local Municipality

Abstract

Local government, as the third sphere of South Africa’s three-sphere system of governance, is tasked with the constitutional mandate to provide an array of services to its respective communities, via its municipalities. Towards execution of this mandate, the South African Constitution provides for an equitable share of the nationally collected government revenue to be distributed amongst the three spheres of government. In addition, conditional grants and subsidies are allocated to South African municipalities, to support the achievement of specific national and provincial objectives. Further to the national revenue share and conditional grants, each municipality is afforded the authority to raise its own revenue via levies and taxes, to finance its service delivery and administration costs. Although such municipal revenue sources are legislated, most South African municipalities have been found wanting in the discharge of its constitutional mandate and a lack of financial resources has, inter alia, been cited as a primary cause of municipal failure. The study aimed to investigate the obstacles contributing to the lack of municipal financial resources, with emphasis on inadequate revenue collection. The Maruleng Local Municipality, serving a portion of the Mopani district in the Limpopo province, is the case institution for the study. Leaning on the theories of reasoned action (community perspective) and economic sustainability (municipal perspective), the study adopts a concurrent mixed methods research design. It includes an analysis of the municipality’s financial records to determine the state of the municipality’s financial affairs, followed by telephonic interviews with municipal officials (inductive analysis), and finally, a survey of ratepayers by means of questionnaires (factor analysis). The study found the municipality to experience severe revenue collection challenges. The findings reveal poor service delivery, inadequate billing, metering challenges, lack of capacity, and poor implementation of policies, as factors contributing to inferior revenue collection and posing serious threats to a municipality’s financial viability. The study recommends that the municipality improve public participation to enhance service delivery and the billing of services. Additional recommendations include the Barriers to revenue collection affecting financial viability: A case of Maruleng local municipality installation of smart water service meters, capacitation of the revenue management unit, and improvement of policy implementation such as the credit control policy.