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. Research methodology Evidence will be gathered according to prescribed, recommended and appropriate methods. Only municipalities in the Kwa-Zulu Natal Province will be invited to participate. A combination of questionnaires and interviews will yield the information to form an opinion. The published works of scholars on the issues of working capital will form the starting point of information gathering so as to inform the researcher of current knowledge and trends in this field of study. Gathering of information will be done on a voluntary basis and any participant choosing not to supply data will be excused without prejudice.Informative will be interpreted by analyzing the responses against the backdrop of legislature and available literature. Outcomes Results and the research statement will be related and the research statement restated in line with the findings. Arguments will be built that will either prove or refute the research statement. Recommendations will be made regarding the issues surrounding the hypothesis in relation to the weaknesses and limitations evidenced by the findings of this research.