State of municipal finance management: an overview of capacity and challenges

摘要

It is important to acknowledge that local government has undergone major reforms in a short time. From these reforms has emerged a comprehensive regulatory framework that guides how municipalities manage their finances. Whereas implementation of the MFMA has been uneven because of the large variation in capacity across municipalities, there is a clear improvement in financial management, as evidenced by the positive trends in the audit outcomes. However, for municipalities to further strengthen their financial management, targeted forms of capacity building are needed. For LGSETA this means determining the types of training needed by BTO officials in municipalities. These training needs range from basic accounting skills in some municipalities to revenue enhancement and costing skills in others. For policymakers and the Auditor-General, it is important to reflect on the regulatory system and the types of incentives it promotes and behaviours it engenders. While it is important for all municipalities to comply with legislation and regulations, the regulatory framework should guard against developing a form of "compliance fixation" where, in lieu of real service delivery, compliance becomes a measure of success.