Lga Notes 2024

Local Government Administration
(1B)
LGA 122
Lecturer: Mr S. Lungisa
Email: slungisa@ufh.ac.za
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Table of contents
Topics Page
Chapter 1
1.1 Developmental local government 6
1.2 Characteristics of developmental local government 6
1.2.1 Maximising social development and economic growth 6
1.2.2 Integrating and co-ordinating 6
1.2.3 Democratising development, empowering and redistribution 7
1.2.4 Leading and learning 7
1.3 Development outcomes of local government 8
1.3.1 Provision of household infrastructure and services 8
1.3.2 Creation of liveable, integrated cities, towns and rural areas 8
1.3.3 Local economic development 8
1.3.4 Some of the LED strategies 8
1.4 Tools and approaches for developmental local government 11
1.4.1 Integrated development planning 11
1.4.2 Performance management 13
1.4.3 Working together with local citizens and partners 13
1.5 Self-reflective questions 14
Chapter 2
2.1 Co-operative government 15
2.2 Principles of co-operative government and intergovernmental relations 15
2.3 Municipalities in co-operative government 16
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2.4 Intergovernmental relations 16
2.5 Intergovernmental structures 17
Chapter 3
3.1 Municipal finance 29
3.2 Municipal fiscal powers 29
3.3 Importance of effective municipal financial management 29
3.4 What is financial management? 30
3.5 Capital and operating budgets 31
3.6 Municipal revenue 31
3.7 Municipal budgets 33
3.8 Responsibilities of Mayors 38
3.9 Responsibilities of municipal officials 40
3.10 Supply chain management policy 44
3.11 Public-private partnerships 47
3.12 Financial reporting and auditing 49
3.13 Financial misconduct 54
Chapter 4
4.1 Local Government Turnaround Strategy (LGTAS) 57
4.2 Key programmes and the strategic objectives of the LGTAS 58
4.3 Expected outcomes of LGTAS 59
4.4 Back to basic approach 60
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4.5 District Development Plan 62
4.5 What makes a good municipality? 62
4.6 What makes a municipality “AT RISK”? 62
4.7 What makes a dysfunctional municipality? 62
4.8 Building blocks of back to basics approach 62
Chapter 5
5.1 Rights and duties of municipal councils 66
5.2 Rights and duties of members of local community 67
5.3 Duties of municipal administration 69
5.4 Local government and traditional leadership 69
5.5 Public/ community participation 70
5.7 References 74
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Learning objectives and outcomes
By the end of this module you will be expected to:
- To understand developmental local government;

- Identify and analyse the characteristics, development outcomes and tools and
approached of local government;
- Understand co-operative and intergovernmental relations;
- Identify and analyse the principles of cooperative government and
intergovernmental structures;
- Identify the role of traditional authorities in service delivery;
- Understand the objectives, focus areas, outcomes of the LGTAS
- Understand the building blocks of the back to basic approach
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CHAPTER 1
Developmental local government
The White Paper on Local Government (1998), conceptualises and defines

developmental local government as “local government committed to working with
citizens and groups within the community to find sustainable ways to meet their social,
economic and material needs and improve the quality of their lives”.
Characteristics of developmental local government
Maximising social development and economic growth
The White Paper on Local Government (1998) provides that, the powers and functions
of local government should be exercised in a way that has a maximum impact on the
social development of communities – in particular meeting the basic needs of the poor
– and on the growth of the local economy. Through its traditional responsibilities
(service and regulation), local government exerts a great influence over the social and
economic well-being of local communities.
Each year municipalities collect a large sum in rates, user charges and fees. They
employ thousands of people throughout the country. In many cases they are
responsible for the price and quality of water, electricity and roads and they control the
use and development of land. In parts of the country they own substantial amounts of
land. They purchase goods and services and pay salaries and therefore contribute to
the flow of money in the local economy.
Integrating and coordinating
The White Paper on Local Government (1998) further reads that, within any local area
many different agencies contribute to development, including national and provincial
departments, parastatals, trade unions, community groups and private sector
institutions. Developmental local government must provide a vision and leadership for
all those who have a role to play in achieving local prosperity. Poor coordination
between service providers could severely undermine the development effort.
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Municipalities should actively develop ways to leverage resources and investment
from both the public and private sectors to meet development targets. One of the most
important methods for achieving greater coordination and integration is integrated
development planning (IDP). Integrated development plans provide powerful tools for
municipalities to facilitate integrated and coordinated delivery within their locality. The
principles set out in the Development Facilitation Act should guide municipalities in
their approach to building integrated and liveable settlements.
Municipal councils play a central role in promoting local democracy. In addition to

representing community interest within the Council, municipal councillors should
promote the involvement of citizens and community groups in the design and delivery
of municipal programmes.
Democratising development, empowering and redistributing
According to the White Paper on Local Government (1998) municipal councils play a
central role in promoting local democracy. In addition to representing community
interests within the Council, municipal councillors should promote the involvement of
citizens and community groups in the design and delivery of municipal programmes.
Leading and learning
Extremely rapidly changes at the global, national and local levels are forcing local
communities to rethink the way they are organised and governed. All over the world
communities must find new ways to sustain their economies, build their societies,
protect their environments, improve personal safety (in particular women) and
eliminate poverty. There is no single correct way to achieve these goals.
National frameworks and support from other levels of government are critical but cities,
towns and rural communities are increasingly having to find within themselves ways
to make their settlements more sustainable. This requires trust between individuals
and open and accommodating relationships between stakeholders. Local government
has a key role to play in building this kind of social capital –
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Developmental outcomes of local government
Introduction
Citizens and communities are concerned about the areas where they live,; they are
concerned about access to services and economic opportunities, mobility, safety,
absence of pollution and congestion, proximity to social and recreational facilities and
so on. Local government can impact on all these facets of our lives. The outcomes
which developmental local government seeks to achieve may differ over time.
However, in our current circumstances and into the forseeable future the key
outcomes are as follows:
- provision of household infrastructure and services;
- creation of liveable, integrated cities, towns and rural areas;
- local economic development (LED); and
- community empowerment and redistribution.
Provision of household infrastructure and services
Local government is responsible for the provision of household infrastructure and

services, an essential component of social and economic development. This includes
services such as water, sanitation, local roads, stormwater drainage, refuse collection
and electricity. Good basic services, apart from being a constitutional right, are
essential to enable people to support family life, find employment, develop their skills
or establish their own small businesses.
The provision of household infrastructure can particularly make a difference to the lives
of women, who usually play the major role in reproductive work which sustains the
family and the local society. The starting point must be to prioritise the delivery of at
least a basic level of services to those who currently enjoy little or no access to service.
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Creation of liveable, integrated cities, towns, and rural areas
Apartheid scars on the spatial structures has left deep scars on the spatial structure
of our cities, towns and rural areas, and the lives of millions of individuals and
households. The spatial integration of our settlements is critical.
Local economic development (LED)
Local government can play an important role in promoting job creation and boosting
the local economy. Investing in the basics – by providing good quality cost-effective
services and by making the local area a pleasant place to live and work – is the key
starting point.
Definition of LED
“Local economic development is a locally-driven process designed to identify, harness

and utilise resources to stimulate the economy and create job opportunities” (White
Paper on Local Government,1998).
The importance of LED
Many local authorities, from the largest metropolitan area to the smallest village, are
confronted with enormous service backlogs and other economic challenges. These
challenges include cities with decaying central business districts (CBDs), rural areas
lacking basic infrastructure and neighbourhoods and townships with few economic
opportunities. In all of these cases, economic growth and job creation are essential.
Some of the LED strategies
Development and maintenance of services and infrastructure
Reddy, Sing and Moodely (2003:180) argue that, the “traditional” role of municipalities
as infrastructure and service providers, operators and maintainers, can be a powerful
strategy in supporting economic development. Efficient and effective infrastructure
and service provision are important factors in boosting business confidence within.
Municipalities are responsible for providing both household and economic
infrastructure. The provision of such infrastructure can stimulate economic investment
and growth. The impact of infrastructure and service provision can be both short term
and long term.
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Retention and expansion of existing businesses
Reddy et al. (2003:181) further maintain that, business retention and expansion
strategies refer to the measures that municipalities take to ensure firms within their
area do not relocate, but rather stay and expand. Business retention and expansion is
similar to industrial recruitment, in that the same measures that ensure existing firms
do not need to locate elsewhere also help to attract new firms to a locality.
Plugging the leaks in the local economy
Reddy et al. (2003:181) write that, within all local economies there are bound to be
“leaks”. This refers to the failure to make money circulate for as long as possible within
a local economy. Industries within small towns may be dependent on large towns for
their suppliers and markets.
SMME development
The promotion of small, medium and micro enterprises within South Africa is regarded
as a key strategy to promote economic development in a manner that both generates
jobs and empowers previously disadvantaged individuals.
Industrial recruitment and place marketing
Place marketing means promoting and advertising a local area, so that people,
business and industries see the municipality as a desirable place to visit, live in and
work in. Industrial recruitment means attracting new industries to the municipality.
Various local factors come into play when a municipality engages in industrial
recruitment. Often municipalities assume that cost is the most important locational
factor, and that all industries locate where production costs are lower. Although cost
is significant, the cost of production is not the only deciding factor for a firm. Firms will
also consider factors such as whether there is a local market for their products, where
suppliers are located, access to research and development institutions, access to
transport networks such as ports and whether the municipality offers good
infrastructure and services.
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Provision of special economic services
The 1996 Constitution states that local government is responsible for promoting the
social and economic development of communities. This provides municipalities with a
mandate to provide special economic services, or to assist other agencies with the
provision of such services, where appropriate. Marketing and investment support can
be provided in order to attract and secure potential investors. Small business support
services can be provided to assist small entrepreneurs.
Tools and approaches for developmental local government
Integrated development planning
Why integrated development planning?
Municipalities face immense challenges in developing sustainable settlements which

meet the needs and improve the quality of life of local communities. To meet these
challenges, municipalities will need to understand the various dynamics operating
within their area, develop a concrete vision for the area, and strategies for realising
and financing that vision in partnership with other stakeholders.
What is an IDP?
Integrated development planning (IDP) is a process through which municipalities

prepare a strategic plan containing short, medium and long-term development
objectives, strategies and programmes for the municipal area. The IDP is a principal
instrument that guides and informs budgeting, management and decision-making
related to service delivery and development in a municipality. Integrated development
planning is a process through which a municipality can establish a development plan
for the short, medium and long-term.
The main steps in producing an integrated development plan are:
- an assessment of the current social, economic and environmental reality in the
municipality – the current reality;
- a determination of community needs through close consultation;
- developing a vision for development in the area;
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-an audit of available resources, skills and capacities;
- a prioritisation of these needs in order of urgency and long-term importance;
- the development of integrated frameworks and goals to meet these needs; and
- the formulation of strategies to achieve the goals within specific time frames.
Section 26 of the Municipal Systems Act no. 32 of 2000 states that, an integrated
development plan must reflect –
(a) the municipality’s vision for the long term development of the municipality with
special emphasis on the municipality’s most critical development and internal
transformation needs;
(b) an assessment of the existing level of development in the municipality, which
must include an identification of communities which do not have access to basic
municipal services;
(c) the council’s development priorities and objectives for its elected term, including
its local economic development aims and its internal transformation needs;
(d) the council’s development strategies which must be aligned with any national
or provincial sectoral plans and planning requirements binding on the municipality
in terms of legislation;
(e) a spatial development framework which must include the provision of basic
guidelines for a land use management system for the municipality;
(f) the council’s operational strategies;
(g) applicable disaster management plans;
(h) a financial plan, which must include a budget projection for at least the next
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three years and;
(i) the key performance indicators and performance targets determined in terms of
section 41
Performance management
Performance management is critical to ensure that plans are being implemented that
they are having the desired development impact, and that resources are being used
efficiently. Municipalities set their own measures of performance, or key performance
indicators. Key performance indicators vary from municipality and cover both efficiency
measures and human development indices. Performance management is a system
that is used to make sure all parts of the municipality work together to achieve the
goals and targets that are set. The municipality must have clear goals and specific
targets of what has to be done to make sure the goals are achieved.
Every department and staff member should be clear of what they have to do and how
their performance will contribute to achieving overall goals and targets. Performance
of individuals, departments and the municipality as a whole should be monitored to
make sure the targets are met. Performance management is very important to make
sure that plans are being implemented, that they are having the desired development
impact, and that resources are being used efficiently.
Working together with local citizens and partners
Building local democracy is a central role of local government, and municipalities

should develop strategies and mechanisms (including but not limited to, participative
planning) to continuously engage with citizens, business and community groups
Municipalities require active participation by citizens at four levels:
- As voters – to ensure maximum democratic accountability of the elected political
leadership for the policies they are empowered to promote.
- As citizens who express, via different stakeholder associations, their views before,
during and after the policy development process in order to ensure that policies
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reflect community preferences as far as possible.
- As consumers and end users, who expect value-for-money, affordable services and
courteous and responsive service. As organised partners involved in the
mobilisation of resources for development via for profit businesses,
non-governmental organisations and community-based institutions.
Self-reflective questions
1. Define developmental local government.
2. Explain the characteristics of developmental local government.
3. Define local economic development (LED).
4. Discuss some of LED strategies with specific reference to your municipality.
5. What is an IDP?
6. What are the core components of the IDP?
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CHAPTER 2
Co-operative government
Section 40 (1) of the Republic of constitution Act (Act 108 of 1996) provides that, in
the Republic, government is constituted as national, provincial and local spheres of
government which are distinctive, interdependent and interrelated. Subsection (2)
further reads that, all spheres of government must observe and adhere to the
principles in Chapter 3 of the 1996 constitution and must conduct their activities within
the parameters that Chapter 3 provides.
Principles of co-operative government and intergovernmental relations
Section 41 (1) of the 1996 Constitution states that, all spheres of government and all
organs of state within each sphere must –
(a) preserve the peace, national unity and the indivisibility of the Republic;
(b) secure the wellbeing of the people of the Republic;
(c) provide effective, transparent, accountable and coherent government for the
Republic as a whole;
(d) be loyal to the Constitution, the Republic and its people;
(e) respect the constitutional status, institutions, powers and functions of
government in the other spheres;
(f) not assume any power or function except those conferred on them in terms of
the Constitution;
(g) exercise their powers and perform their functions in a manner that does not
encroach on the geographical, functional or institutional integrity of government
in another sphere; and
(h) co-operate with one another in mutual trust and good faith by –
(i) fostering friendly relations;
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(ii) assisting and supporting one another;
(iii) informing one another of, and consulting one another on, matters of
common interest;
(v) adhering to agreed procedures; and
(vi) avoiding legal proceedings against one another.
Sub-section (2) further provides that, An Act Parliament must –
(a) establish or provide for structures and institutions to promote and facilitate
intergovernmental relations; and
(b) provide for appropriate mechanisms and procedures to facilitate settlement of
intergovernmental disputes.
Municipalities in co-operative government
Local government is a sphere of government in its own right, and is no longer a

function of national or provincial government. It is an integral component of the
democratic state. All spheres of government are obliged to observe the principles of
co-operative government put forward in the 1996 Constitution.
Intergovernmental relations
Intergovernmental relations are the set of multiple formal and informal processes,
channels, structures and institutional arrangements for bilateral and multilateral
interaction within and between spheres of government. In South Africa a system of
intergovernmental relation has emerged to give expression to the concept of co-
operative government contained in the 1996 Constitution.
Section 154 (1) of the RSA Constitution Act (Act 108 of 1996 states that, the national
government and provincial governments, by legislative and other measures, must
support and strengthen the capacity of municipalities to manage their own affairs to
exercise their powers and to perform their functions.
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Intergovernmental structures
President’s Co-ordinating council
Composition of the President’s Co-ordinating Council
According to section 6 (1) of the Intergovernmental Relations Framework Act, there is

a President’s Co-ordinating Council consisting of –
(a) the President;
(b) the Deputy President;
(c) the Minister in the Presidency;
(d) the Minister;
(e) the Cabinet member responsible for finance;
(f) the Cabinet member responsible for the public service;
(g) the Premiers of the nine provinces; and
(h) a municipal councillor designated by the national organisation representing
organised local government.
The President is the chairperson of the Council. The President may invite any person
not mentioned in subsection (1) to a meeting of the Council.
Role of the President’s Co-ordinating Council
Section 7 states that, the Council is a consultative forum for the President –
(a) to raise matters of national interest with provincial governments and organised
local government and to hear their views on those matters;
(b) to consult provincial governments and organised local government on –
(i) the implementation of national policy and legislation in provinces
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municipalities;
(ii) the co-ordination and alignment of priorities, objectives, and strategies
across national, provincial and local governments; and
(iii) any other matters of strategic importance that affect the interests of other
Governments;
(c) to discuss performance in the provision of services in order to detect failures
and to initiate preventative or corrective action when necessary; and
(d) to consider –
(i) reports from other intergovernmental forums on matters affecting the
national interest, including a report referred to in section 21of the IRFA; and
(ii) other reports dealing with the performance of provinces and
municipalities.
The President convenes the meetings of the Council and determines the agenda for
a meeting of the Council but suggestions for inclusion in the agenda may be submitted
to the Minister in terms of frame determined by the President. The Minister is
responsible for providing administrative and other support services to the Council.
National intergovernmental forums
Establishment national intergovernmental forums
According to section 9(1) of the intergovernmental Framework Act, any Cabinet

member may establish a national intergovernmental forum to promote and facilitate
intergovernmental relations in the functional area for which that Cabinet member is
responsible.
Composition of national intergovernmental forum
Section 10 (1) further states that, a national intergovernmental forum established in

terms of section 9(1) consists of –
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(a) the Cabinet member responsible for the functional area for which the forum is
established;
(b) any Deputy Minister appointed for such functional area;
(c) the members of the Executive Councils of Provinces who are responsible for a
similar functional area in their respective provinces; and
(d) a municipal councillor designated by the national organisation representing
organised local government, but only if the functional area for which the forum is
established includes a matter assigned to local government in terms of Part B of
Schedule 4 or Part B of Schedule 5 to the Constitution or in terms of national
legislation.
The relevant Cabinet member is the chairperson of the forum.
Role of the national intergovernmental forum
A national intergovernmental forum established in terms of section 9 is a consultative

forum for the Cabinet member responsible for the functions area for which the forum
is established –
(a) to raise matters of national interest within that functional area with provincial
governments and, if appropriate, organised local government and to hear their
views on those matters;
(b) to consult provincial governments and, if appropriate, organised local
government on –
(i) the development of national policy and legislation relating to matters
affecting that function area;
(ii) the implementation of national policy and legislation with respect to that
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functional area;
(iii) the co-ordination and alignment within that functional area of –
(aa) strategic and performance plans; and
(bb) priorities, objectives and strategies across national, provincial and
local governments; and
(iv) any other matters of strategic importance within the functional area that
affect the interests of other governments; and
(c) to discuss performance in the provision of services in order to detect failures
and to initiate preventive or corrective action when necessary
Reports and referrals to President’s Co-ordinating Council
A national intergovernmental forum established in terms of section 9 must report back

to the President’s Co-ordinating Council on any matter referred to it by the Council.
The Cabinet member responsible for the functional area for which a national
intergovernmental forum is established may in consultation with the President refer
any matter discussed in the forum to the Council.
The Cabinet member responsible for the functional area for which a national
intergovernmental forum is established convenes the meetings and determines the
agenda for a meeting of the forum.
Provincial intergovernmental forums
Establishment of Premier’s intergovernmental forums
Section 16 of the intergovernmental Framework Act states that, there is a Premier’s

intergovernmental forum to promote and facilitate intergovernmental relations
between the province and local governments in the province.
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Composition of Premier’s intergovernmental forum
A Premier’s intergovernmental forum consists of –
(a) the Premier of the province;
(b) the member of the Executive Council of the province who is responsible for
local government in the province;
(c) any other members of the Executive Council designated by the Premier;
(d) the mayors of district and metropolitan municipalities in the province;
(e) the administrators of any of those municipalities if the municipality is subject to
an intervention in terms of section 139 of the Constitution; and
(f) a municipal councillor designated by organised local government in the province.
The premier is the chairperson of the forum.
Role of Premier’s intergovernmental forum
According to section 18 of the Intergovernmental Framework Act, a Premier’s

intergovernmental forum is consultative forum for the Premier of a province and local
government in the province –
(a) to discuss and consult on matters of mutual interest including –
(i) the implementation in the province of national policy and legislation affecting
local government interest;
(ii) matters arising in the President’s Co-ordinating Council and other national
intergovernmental forums affecting local government interests in the
province;
(iii) draft national policy and legislation relating to matters affecting local
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government interests in the province;
(iv) the implementation of national policy and legislation with respect to such
matters;
(v) the development of provincial policy and legislation relating to such matters;
(vi) the implementation of provincial policy and legislation with respect to such
matters;
(vii) the co-ordination of provincial and municipal development planning to
facilitate coherent planning in the province as a whole;
(viii) the co-ordination and alignment of the strategic and performance plans and
priorities, objectives and strategies of the provincial government and local
government in the province;
(ix) any other matters of strategic importance that affect the interests of local
government in the province; and
(b) to consider reports from –
(i) other provincial intergovernmental forums on matters of mutual interest to the
province and local governments in the province
(ii) district intergovernmental forums in the province
The Premier of a province convenes the meetings of the Premier’s intergovernmental

forum and determines the agenda for a meeting of a forum.
Report to President’s Co-ordinating Council
Section 20 of the Intergovernmental Framework Act provides that, a Premier’s

intergovernmental forum must –
(a) report at least annually to the President’s Co-ordinating Council on progress with
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the implementation of national policy and legislation within the province; and
(b) may report to the Council on matters of national interest that have arisen in the
forum.
Interprovincial forum
Section 22 (1) of the Intergovernmental Framework Act states that, the Premiers of
two or more provinces may establish an interprovincial forum to promote and facilitate
intergovernmental relations between those provinces. The composition, role and
functioning of an interprovincial forum established in terms of subsection (1) must be
determined by agreement between the participating provinces.
Role of interprovincial forums
Section 23 further provides that, an interprovincial forum is a consultative forum for the
participating provinces to discuss and consult on matters of mutual interest, including
–
(a) information sharing, best practice and capacity building;
(b) co-operating on provincial developmental challenges affecting more than one
province; and
(c) any other matter of strategic importance affects the interests of the participating
provinces
Municipal intergovernmental forums
Establishment of district intergovernmental forums
According to section 24 of the Intergovernmental Framework Act, there is a district

intergovernmental forum to promote and facilitate intergovernmental relations
between the district municipality and the local municipalities in the district.
Composition of district intergovernmental forums
A district intergovernmental forum consists of –
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(a) the mayor of the district municipality;
(b) the mayors of the local municipalities in the district or, if a municipality does not
have a mayor a councillor designated by the municipality; and
(c) the administrator of any of those municipalities if the municipality is subject to an
intervention in terms of section 139 of the Constitution. The mayor of the district
municipality or, if that municipality is subject to an intervention, the administrator
of the municipality is the chairperson of the forum, the chairperson of the forum
may invite any person not mentioned in subsection (1) to a meeting of the forum
Role of district intergovernmental forums
According to section 26 (1) of the Intergovernmental Framework Act, the role of a

district intergovernmental forum is to serve as a consultative forum for the district
municipality and the local municipalities in the district to discuss and consult each other
on matters of mutual interest, including –
(a) draft national and provincial policy and legislation relating to matters affecting
local government interests in the district;
(b) the implementation of national and provincial policy and legislation with respect
to such matters in the district;
(c) matters arising in the Premier’s intergovernmental forum affecting the district;
(d) mutual support in terms of section 88 of the Local Government: Municipal
Structures Act, 1998 (Act No. 117 of 1998);
(e) the provision of services in the district;
(f) coherent planning and development in the district;
(g) the co-ordination and alignment of the strategic and performance plans and
priorities, objectives and strategies of the municipalities in the district; and
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(h) any other matters of strategic importance which affect the interests of the
municipalities in the district.
Subsection (2) provided that, a district intergovernmental forum may refer a matter
arising in the forum to –
(a) the Premier’s intergovernmental forum; or
(b) any other provincial intergovernmental forum established in terms of section 21.
The chairperson of the district intergovernmental forum –
(a) convenes the meetings of the forum; and
(b) determines the agenda for the meeting of the forum
A majority of the local municipalities in a district may request the chairperson in writing
–
(a) to convene a meeting of the district intergovernmental forum at a time and place
set out in the request; or
(b) to include in the agenda for a meeting any specific matter for discussion
Intermunicipality forums
Section28 (1) states that, two or more municipalities may establish an intermunicipality
forum to promote and facilitate intergovernmental relations between them. Subsection
(2) further provides that, the composition, role and functioning of an intermunicipality
forum established in terms of subsection (1) must be determined by agreement
between the participating municipalities.
Role of intermunicipality forums
According to section 29, the role of the intermunicipality forum is to serve as a

consultative forum for the participating municipalities to discuss and consult each other
on matters of mutual interest, including –
(a) information sharing, best practice and capacity building;
(b) co-operating on municipal developmental challenges affecting more than one
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municipality; and
(c) any other matter of strategic importance which affects the interests of the
participating municipalities.
Roles and responsibilities of national and provincial government
National government
The White Paper on Local Government (1998) states that, national government has a
number of roles and responsibilities with respect to local government, including:
A strategic role: National government is responsible for setting the overall strategic
framework for the economic and social development of the nation, and for all spheres
of government. It should ensure local government operates within an enabling
framework and is structured and capacitated in way that best enables it to promote the
development of citizens, local communities and the nation.
Providing a legislative framework for local government: National government

must provide an overall legislative framework for local government within the general
legal framework set out in the 1996 Constitution
Providing a framework for municipal capacity-building and support for

municipalities: Section 154(1) of the 1996 Constitution tasks both national and
provincial government with supporting and strengthening the capacity of municipalities
to manage their own affairs, exercise their powers and perform their functions.
Support for key institutions: National government is committed to supporting and

strengthening organised local government to enable it to perform its constitutional role
effectively.
Local government finances: Fiscal provisions for local government, including

managing the system of intergovernmental fiscal relations, situating local
government’s fiscal powers within the national tax structure, and passing legislation to
determine local government’s “equitable share” of revenue raised nationally and on a
range of other financially related topics such as municipal budgetary reforms and
processes.
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Monitoring and oversight: To ensure the necessary levels of compatibility, uniformity
and consistency, national government needs to develop an overall framework for a
system of monitoring and oversight within which other organs of state, particularly
provincial governments, will perform this these functions. Provincial government
Provincial government’s roles include:
A strategic role with respect to developing a vision and framework for integrated
economic, social and community development in the province through the provincial
growth and development strategy.
A developmental role: Provincial government should ensure that municipal

integrated development plans combine to form a viable development framework
across the province and are vertically integrated with provincial growth and
development strategy. Provincial government is also responsible for processing grants
to municipalities for bulk infrastructure, housing, public works etc. Provincial
government should ensure that municipal planning and budgeting processes give
priority to the basic needs of the community and promote the social and economic
development of the community as required by Section 153 of the 1996 Constitution.
An intergovernmental role: Provincial government has an intergovernmental role to

play with respect to local government. It should establish forums and processes for
the purpose of including local government in decision-making processes which affect
it. Provincial government can also promote horizontal cooperation and coordination
between municipalities in the province.
An institutional development and capacity-building role: Provincial government

establishes municipalities, and is tasked by Section 155(6) of the 1996 Constitution
with promoting the development of local government capacity to enable municipalities
to perform their and manage their own affairs.
A monitoring role: Provincial government has a key role in monitoring local

government in order to ensure that high standard of public service and good
governance are maintained. This function must be conducted in ways which empower
local government, and do not impede its functions.
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An intervention role: Powers of intervention by provincial government in affairs of
local government provide a safeguard to:
- protect and promote minimum standards of local government delivery and
democracy and ensure that local government fulfils its constitutional mandate;
- restore a municipality to financial health or to ensure financial sustainability;
- promote accountability and public faith in local government institutions; and
- prevent corruption and maladministration. Powers of intervention should be seen a
measure of last resort, where the problem cannot be resolved through ordinary
intergovernmental processes. National and provincial should be committed to
ensure that stabilisation of the local government environment to such an extent that
interventions are exception and not regular occurrences.
1. Explain the terms ‘co-operative government’ and ‘intergovernmental relations’.
2. Explain the principles of co-operative government.
3. Write notes on the composition and role of the Presidential Co-ordinating Council.
4. Explain the composition and role of the Premier’s intergovernmental forum.
5. Explain the composition and role of the district intergovernmental forum.
6. What is the role of intermunicipality forum?
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CHAPTER 3
Municipal finance
Municipal fiscal powers and functions
According to section 229 of the Republic of South Africa Constitution Act (Act 108 of
1996), a municipality may impose –
(a) rates on property and surcharges on fees for services provided by or on
behalf of the municipality; and
(b) if authorised by national legislation, other taxes, levies and duties
appropriate to local government or to the category of local government
into which that municipality falls, but no municipality may impose income
tax, value-added tax, general sales tax or customs duty.
Importance of effective municipal financial management
According to the Education and Training Unit (2002:23) effective financial

management can help municipalities to transform their local areas into better places
to live and work. Most councillors and members of the community know what municipal
services they would like to have in their area. This dream of the ideal community is
known as a “vision” for the municipality. One of a councillor’s greatest responsibilities
is approving and regularly monitoring the municipality’s budget that provides money
to implement the vision. This work should be done in consultation co-operation with
the ward committee.
Without funds to implement the policies, councillors will not be able make a difference
or serve their communities well. Effective financial management ensures that there
are funds available to implement council policies. This a great responsibility as
municipalities are responsible for managing large amounts of money and delivering
services that affect people’s lives every day. Councillors, committee members and
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officials all have a duty to ensure that these monies are managed carefully,
transparently and honestly.
What is financial management?
There are four key parts to effective financial management:
 Budgeting;
 Safeguarding;
 Monitoring; and
 Auditing.
The table below sets out the financial management processes used in municipalities
PROCESS WHAT IS IT?

Budgeting Working out what income the municipality will get and
balancing this with the planned expenditure, by preparing
detailed plans and forecasts
Safeguarding Putting in place controls to protect the income, capital and
assets such as money, motor vehicles, computer
equipment, etc. against misuse, damage, loss or theft.
Monitoring Monitoring actual income and expenditure and comparing
(Financial reporting) this to the budget, through regular financial reporting and
corrective action when needed.
Auditing Reporting financial results to all stakeholders by preparing
(Accountability) municipal financial statements that are audited by the
Auditor-General who reports to Parliament.
Source: Education and Training Unit (2002)
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Capital and operating budgets
There are two types of budgets:
 Capital budget deals with big costs that you pay to develop something, and
spells out how you will pay for this – for example putting in water pipes to a new
township.
 Operating budget deals with the day-today costs and income to deliver
municipal services – for example the meter reader’s wages and maintenance
work to keep the water flowing.
Operating expenditure is the cost of goods and services from which there will be short-
term benefit – that is, the services will be used up in less than one year. For example,
the payment of staff salaries results in short-term benefit as salaried employees are
paid monthly for the one month’s work. Examples of operating costs are salaries,
wages, repairs and maintenance, telephones, petrol, stationery.
Operating income is the amount received for services delivered for a short-term period.
For example, ratepayers pay rates monthly or annually as payment to their
municipality for receiving municipal services. Examples of operating income are
property rates, service charges, investment interest, and traffic fines. The capital
budget puts money aside, for planned expenditure on long-term purchases and big
investments such as land, buildings, motor vehicles, equipment and office furniture
that will be a municipal asset for more than a year – probably for many years to come.
A municipality’s capital budget will list the estimated costs of all items of a capital
nature such as the construction of roads, buildings and purchases of vehicle that are
planned in that budget year.
Municipal revenue
Opening of bank account
Section 7 (1) of the Municipal Finance Management Act states that, every municipality
must open and maintain at least one bank account in the name of the municipality. All
money received by a municipality must be paid into its bank account or accounts, and
this must be done promptly and in accordance with Chapter 3 of the MFMA and any
31
requirements that may be prescribed. Subsection (3) further reads that, a municipality
may not open bank account –
(a) abroad;
(b) with an institution not registered as a bank in terms of the Banks Act,
1990 (Act No.94 of 1990); or
(c) otherwise than in the name of the municipality
Money may be withdrawn from the municipal bank account only in terms of section
11(i) of the MFMA.
Bank account details to be submitted to provincial treasuries and Auditor-

General
Section 9 of the Municipal Finance Management Act states that, the accounting officer
of a municipality must submit to the relevant provincial treasury and the Auditor-
General, in writing –
(a) within 90 days after the municipality has opened a new bank account, the
name of the bank where the account has been opened, and the type and
number of the account;
(b) annually before the start of a financial year, the name of each bank
account where the municipality holds a bank account, and the type and
number of each account.
Control of municipal bank accounts
Section 10 (i) of the Municipal Finance Management Act provides that, the accounting
officer of a municipality –
(a) must administer all the municipality’s bank accounts, including a bank account
referred to in section 12 or 48(2)(d);
(b) is accountable to the municipal council for the municipality’s bank accounts; and
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(c) must enforce compliance with sections 7,8 and 9
Municipal budgets
Appropriation of funds for expenditure
According to section 15 of the MFMA, a municipality may, except where otherwise

provided in the Act, incur expenditure only –
(a) in terms of an approved budget; and
(b) within the limits of the amounts appropriated for the different votes in an
approved budget.
Annual budgets
Section 16 (1) of the MFMA provides that, the council of a municipality must for each
financial year approved an annual budget for the municipality before tha start of that
financial year. Subsection (2) further provides that, in order for a municipality to comply
with subsection (1), the mayor of the municipality must table the annual budget at a
council meeting at least 90 days before the start of the budget year. Subsection (1)
does not preclude the appropriation of money for capital expenditure for a period not
exceeding three financial years, provided a separate appropriation is made for each
of those financial years.
Contents of annual budgets
Section 17 (1) of the MFMA reads that, an annual budget of a municipality must be a
schedule in the prescribed format –
(a) setting out realistically anticipated revenue for the budget year from each
revenue source;
(b) appropriating expenditure for the budget year under the different votes of the
municipality;
(c) setting out indicative revenue per revenue source and projected expenditure by
vote for the two financial years following the budget year;
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(d) setting out –
(i) estimated revenue and expenditure by vote for the current year; and
(ii) actual revenue and expenditure by vote for the financial year preceding the
current year; and
(e) a statement containing any other information required by section 215(3) of the
Constitution or as may be prescribed. Subsection (2) further states that, an
annual budget must generally be divided into a capital and an operating budget
in accordance with international best practice, as may be prescribed.
Budget preparation process
According to section 21 (1) of the MFMA, the mayor of a municipality –
(a) co-ordinate the processes for preparing the annual budget and for reviewing
the municipality’s integrated development plan and budget –related policies to
ensure that the tabled budget and any revisions of the integrated development
plan and budget-related policies are mutually consistent and credible.
(b) at least 10 months before the start of the budget year, table in the municipal
council a time schedule outlining key deadlines for –
(i) the preparation, tabling and approval of the annual budget;
(ii) the annual review of –
(aa) the integrated development plan in terms of section 34 of the
municipal Systems Act ; and
(bb) the budget related-policies;
(iii) the tabling and adoption of any amendments to the integrated
development and the budget-related policies; and
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(iv) any consultative processes forming part of the processes referred to in
subparagraphs (i), (ii) and (iii)
Subsection 2 further states that, when preparing the annual budget, the mayor of a
municipality must –
(a) take into account the municipality’s integrated development plan;
(b) take all reasonable steps to ensure that the municipality revises the integrated
development plan in terms of section 34 of the Municipal Systems Act, taking
into account realistic revenue and expenditure projections for future years;
(c) take into account the national budget, the relevant provincial budget, the
national government’s fiscal and macro-economic policy, the annual Division of
Revenue Act and any agreements reached in the Budget Forum;
(d) consult
(i) the relevant district municipality and all other local municipalities within the
area of the district municipality, if the municipality is a local municipality;
(ii) all local municipalities within its area, if the municipality is a district
Municipality;
(iii) the relevant provincial treasury, and when requested, the National
Treasury; and
(iv) any national or provincial organs of state, as may be prescribed; and
(e) provide, on request, any information relating to the budget –
(i) to the National Treasury; and
(ii) subject to any limitations that may be prescribed, to –
(aa) the national departments responsible for water, sanitation, electricity
35
and any other service as may be prescribed;
(bb) any other national and provincial organ of state, as may be prescribed;
and
(cc) another municipality affected by the budget.
Publication of annual budgets
Section 22 of the Municipal Finance Management Act states that, immediately after
an annual budget is tabled in a municipal council, the accounting officer of the
municipality must –
(a) in accordance with Chapter 4 of the Municipal Systems Act –
(i) make public the annual budget and the documents referred to in section 17
(3); and
(ii) invite the local community to submit representation in connection with the
budget; and
(b) submit the annual budget –
(i) in both printed and electronic formats to the National Treasury and the
relevant provincial treasury; and
(ii) in either format to any prescribed national or provincial organs of state and
to other municipalities affected by the budget.
Consultation on tabled budgets
When the annual budget has been tabled, the municipal council must consider any
views of –
(a) the local community; and
(b) the National Treasury, the relevant provincial treasury and any provincial or
national organs of state or municipalities which made submissions on the
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budget.
Subsection (2) reads that, after considering all budget submission, the council must
give the mayor an opportunity –
(a) to respond to the submissions; and
(b) if necessary, to revise the budget and table amendments for consideration by
the council.
The National Treasury may issue guidelines on the manner in which municipal
councils should process their annual budgets, including guidelines on the formation of
a committee of the council to consider the budget and to hold public hearings. No
guidelines issued in terms of subsection (3) are binding on a municipal council unless
adopted by the council.
Approval of annual budgets
According to section 24 (1) of the MFMA, the municipality must at least 30 days before
the of the budget year consider approval of the annual budget. Subsection 2 further
reads that, an annual budget –
(a) must be approved before the start of the budget year;
(b) is approved by the adoption by the council of a resolution referred to in section
17(3)(a)(i); and
(c) must be approved together with the adoption of resolutions as may be
necessary –
(i) imposing any municipal tax for the budget year;
(ii) setting any municipal tariffs for the budget year;
(iii) approving measurable performance objectives for revenue from each
source and for each vote in the budget;
(iv) approving any changes to the municipality’s budget-related policies.
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The accounting officer of a municipality must submit the approved annual budget to
the National Treasury and the relevant provincial treasury.
Responsibilities of mayors
General responsibilities
According to section 52 of the Municipal Finance Management Act (Act No. 56 of

2000), the mayor of a municipality –
(a) must provide general political guidance over the fiscal and financial affairs of the
municipality;
(b) in providing such general political guidance, may monitor and, to the extent
provided in this Act, oversee the exercise of responsibilities assigned in terms
of this Act to the accounting officer and the chief financial officer, but may not
interfere in the exercise of those responsibilities;
(c) must take all reasonable steps to ensure that the municipality performs its
constitutional and statutory functions within the limits of the municipality’s
approved budget;
(d) must, within 30 days of the end of each quarter, submit a report to the council
on the implementation of the budget and the financial state of affairs of the
municipality; and
(e) must exercise the other powers and perform the other duties assigned to the
mayor in terms of this Act or delegated by the Council to the mayor.
Budget processes and related matters
Section 53 (1) of the MFMA further state that, the mayor of a municipality must –
(a) provide general political guidance over the budget process and the priorities that
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must guide the preparation of a budget;
(b) co-ordinate the annual revision of the integrated development plan in terms of
section 34 of the Municipal Systems Act and the preparation of the annual
budget, and determine how the integrated development plan is to be taken into
account or revised for the purpose of the budget; and
(c) take all reasonable steps to ensure –
(i) that the municipality approves its annual budget before the start of the
budget year;
(ii) that the municipality’s service delivery and budget implementation plan is
approved by the mayor within 28 days after the approval of the budget;
and
(iii) that the annual performance agreements as required in terms of section
57(1)(b) of the Municipal Systems Act for the municipal manager and all
senior managers –
(aa) comply with the MFMA in order to promote sound financial
management
(bb) are linked to the measurable performance objectives approved
with the budget and to the service delivery and budget
implementation plan; and
(cc) are concluded in accordance with section 57(2) of the Municipal
Systems Act.
Subsection (2) provides that, the mayor must promptly report to the municipal council
and the MEC for finance in the province any delay in the tabling of an annual budget,
39
the approval of the service delivery and budget implementation plan or the signing of
the annual performance agreements. Subsection(3) further provides that, the mayor
must ensure –
(a) that the revenue and expenditure projections for each month and the service
delivery targets and performance indicators for each quarter, as set out in the
service delivery and budget implementation plan, are made public no later than
14 days after the approval of the service delivery and budget implementation
Plan; and
(b) that the performance agreements of the municipal manager, senior manages
and any other categories of officials as may be prescribed, are made public no
later 14 days after the approval of the municipalities service delivery and budget
implementation plan
Responsibilities of municipal officials
Accounting officers
According to section 60 of the Municipal Finance Management Act, the municipal

manager of a municipality is the accounting officer of the municipality for the purpose
of this Act, and, as accounting officer, must –
(a) exercise the functions and powers assigned to an accounting officer in terms of
of this Act; and
(b) provide guidance and advice on compliance with this Act to –
(i) the political structures, political office-bearers and officials of the
municipality; and
(ii) any municipal entity under the sole or shared control of the municipality.
40
Fiduciary responsibilities of accounting officers
Section 61 (1) provides that, the accounting officer of a municipality must –
(a) act with fidelity, honesty, integrity and in best interests of the municipality in
managing its financial affairs;
(b) disclose to the municipal council and the mayor all material facts which are
available to the accounting officer or reasonably discoverable, and which in any
way might influence the decisions or actions of the council or the mayor; and
(c) seek, within the sphere of influence of the accounting officer, to prevent any
prejudice to the financial interests of the municipality.
Subsection (2) further provides that, an accounting officer may not –
(a) act in a way that is consistent with the duties assigned to accounting
officers of municipalities in terms of this Act; or
(b) use the position or privileges of, or confidential information obtained as,
accounting officer for personal gain or to improperly benefit another
person.
Financial management
The accounting officer of municipality is responsible for managing the financial

administration of the municipality, and must for this purpose take all reasonable steps
to ensure –
(a) that the resources of the municipality are used effectively, efficiently and
economically;
(b) that full and proper records of the financial affairs of the municipality are kept in
accordance with any prescribed norms and standards;
41
(c) that the municipality has and maintains effective, efficient and transparent
systems –
(i) of financial and risk management and internal control; and
(ii) of internal audit operating in accordance with any prescribed norms and
standards;
(d) that unauthorised, irregular or fruitless and wasteful expenditure and other
losses are prevented;
(e) that disciplinary or, when appropriate, criminal proceedings are instituted
against any official of the municipality who has allegedly committed an act of
financial misconduct or an offence in terms of Chapter 15; and
(f) that the municipality has and implements –
(i) a tariff policy referred to in section 74 of the Municipal Systems Act;
(ii) a rate policy as may be required in terms of any applicable national
legislation;
(iii) a credit control and debt collection policy referred to in section 96(b) of the
Municipal Systems Act; and
(iv) a supply chain management policy in accordance with Chapter 11.
The accounting officer is responsible for and must account for all bank accounts of
the municipality, including any bank account opened for –
(a) a relief, charitable, trust or other fund set up by the municipality in terms of
section 12; or
(b) a purpose referred to in section 48(2)(d).
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Asset and liability management
According to section 63(1), the accounting officer of a municipality is responsible for

the management of –
(a) the assets of the municipality, including the safeguarding and the maintenance
of those assets; and
(b) the liabilities of the municipalities
The accounting officer must for the purposes of subsection (1) take all reasonable
steps to ensure –
(a) that the municipality has and maintains, a management, accounting and
information system that accounts for the assets and liabilities of the municipality
(b) that the municipality’s assets and liabilities are valued in accordance with
standards of generally recognised accounting practice; and
(c) that the municipality has and maintains a system of internal control of assets
and liabilities, including an asset and liabilities register, as may be prescribed.
Revenue management
Section 64(1) of the Municipal Finance Management Act state that, the accounting
officer of a municipality is responsible for the management of the revenue of the
municipality. The accounting officer must for the purposes of subsection (1) take all
reasonable steps to ensure –
(a) the municipality has effective revenue collection systems consistent with section
95 of the Municipal Systems Act and the municipality’s credit control debt
collection policy;
(b) that revenue due to the municipality is calculated on a monthly basis;
(c) that accounts for municipal tax and charges for municipal services are prepared
43
on a monthly basis, or less often as may be prescribed where monthly accounts
are uneconomical;
(d) that all money received is promptly deposited in accordance with this Act into the
municipality’s primary and other bank accounts;
(e) that the municipality has and maintains a management, accounting and
information system which –
(i) regonise revenue when it is earned;
(ii) accounts for debtors; and
(iii) accounts for receipts of revenue
(f) that the municipality has and maintains a system of internal control in respect of
debtors and revenue, as may be prescribed;
(g) that the municipality charges interest on arrears, except where the council has
granted exemptions in accordance with its budget-related policies and within a
prescribed framework; and
(h) that all revenue received by the municipality, including revenue received by any
collecting agent on its behalf, is reconciled at least on a weekly basis.
Expenditure management
The accounting officer of a municipality is responsible for the management of the

expenditure of the municipality.
Supply chain management policy
According to section 111 of the Municipal Finance Management Act, each municipality
and each municipal entity must have and implement a supply chain management
policy which gives effect to the provisions of Part 1 of this Act.
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Supply chain management policy to comply with prescribed framework
The supply chain management policy of a municipality or a municipal entity must be

fair, equitable, transparent, competitive, and cost-effective and comply with a
prescribed regulatory framework for municipal supply chain management, which must
cover at least the following:
(a) a range of supply management processes that municipalities and municipal
entities may use, including tenders; quotations, auctions and other types of
competitive bidding;
(b) when a municipality or municipal entity may or must use a particular type of
process;
(c) procedures and mechanisms for each type of process;
(d) procedures and mechanisms for more flexible processes where the value of a
contract is below a prescribed amount;
(e) open and transparent pre-qualification processes for tenders or other bids;
(f) competitive bidding processes in which only pre-qualified persons may
participate;
(g) bid documentation, advertising of and invitations for contracts;
(h) procedures and mechanisms for –
(i) the opening, registering and recording of bids in the presence of interested
persons;
(ii) the evaluation of bids to ensure best value for money;
(iii) negotiating the final terms of contracts; and
(iv) the approval of bids
(i) screening processes and security clearances for prospective contractors on
45
tenders or other bids above a prescribed value;
(j) compulsory disclosure of any conflicts of interests prospective contractors may
have in specific tenders and the exclusion of such prospective contractors from
those tenders or bids.
(k) participation in the supply chain management system of persons who are not
officials of the municipality or municipal entity, subject to section 117;
(l) the barring of persons from participating in tendering or other bidding processes,
including persons –
(i) who were convicted of fraud, corruption during the past five years;
(ii) who wilfully neglected, reneged of or failed to comply with a government
contract during the past five years; or
(iii) whose tax matters are not cleared by SARS;
(m) measures for –
(i) combating fraud, corruption, favouritism and unfair and irregular practices
in municipal supply chain management; and
(ii) promoting ethics of officials and other role players involved in municipal
supply chain management;
(n) the invalidation of recommendations or decisions that were unlawfully or
improperly made, taken or influenced, including recommendations or decisions
that were made, taken or in any way influenced by –
(i) councillors in contravention of item 5 or 6 of the Code of Conduct for
Councillors set out in Schedule 1 to the Municipal Systems Act; or
(ii) municipal officials in contravention of item 4 or 5 of the Code of Conduct
46
for Municipal Staff Members set out in Schedule 2 to the Act
(o) the procurement of goods and services by municipalities or municipal entities
through contracts procured by other organs of state;
(p) contract management and dispute settling procedures; and
(q) the delegation of municipal supply chain management powers and duties
including to officials.
Subsection (2) reads that, the regulatory framework for municipal supply chain
management must be fair, equitable, transparent, competitive and cost-effective
Public-private-partnerships
Conditions and process for public-private-partnerships
Section 120 (1) of the MFMA states that, a municipality may enter into a public-private
partnership agreement, but only if the municipality can demonstrate that the
agreement will –
(a) provide value for money to the municipality;
(b) be affordable for the municipality; and
(c) transfer appropriate technical, operational and financial risk to the private party.
Subsection (2) further provides that, a public-private partnership agreement must

comply with any prescribed regulatory framework for public-private partnerships. If the
public-private partnership involves the provision of a municipal service, Chapter 8 of
the Municipal Systems Act must also be complied with.
Before a public-private partnership is concluded, the municipality must conduct a

feasibility study that –
(a) explains the strategic and operational benefits of the public-private partnership
for the municipality in terms of its objectives;
47
(b) describes in specific terms -
(i) the nature of the private party’s role in the public-private partnership;
(ii) the extent to which this role, both legally and by nature, can be performed
by a private party; and
(iii) how the proposed agreement will –
(aa) provide value for money to the municipality;
(bb) be affordable for the municipality;
(cc) transfer appropriate technical, operational and financial risks to the
private party; and
(dd) impact on the municipality’s revenue flows and its current and future
budgets
(c) takes into account all relevant information; and
(d) explains the capacity of the municipality to effectively monitor, manage and
enforce the agreement;
The national government may assist municipalities in carrying out and assessing
feasibility studies referred in subsection (4). When a feasibility study has been
completed, the accounting officer of the municipality must -
(a) submit a report on the feasibility study together with all other relevant
documents to the council for a decision, in principle, on whether the municipality
should continue with the proposed public-private partnership;
(b) at least 60 days prior to the meeting of the council at which the matte is to be
considered, in accordance with section 21A of the Municipal Systems Act –
(i) make public particulars of the proposed public-private partnership including
48
a report on the feasibility study; and
(ii) invite the local community and other interested persons to submit to the
municipality comments or representations in respect of the proposed
public- private partnership; and
(c) solicit the views and recommendations of –
(i) the National Treasury;
(ii) the national department responsible for local government
(iii) if the public-private partnership involves the provision of water, sanitation,
electricity or any other service as may be prescribed, the responsible
national department; and
(iv) any national or provincial organ of state as may be prescribed.
Part 1 of Chapter 11 applies to the procurement of public-private partnership

agreements. Section 33 also applies if the agreement will have multi-year budgetary
implications for the municipality within the meaning of that section.
Financial reporting and auditing
Preparation and adoption of annual reports
Every municipality and municipal entity must for each financial year prepare an annual
report in accordance with Chapter 12 of MFMA. The council of a municipality must
within nine months after the end of a financial year deal with the annual report of the
municipality and of any municipal entity under the municipality’s sole or shared control
in accordance with section 129 of the MFMA. The purpose of the Annual report is –
(a) to provide a record of the activities of the municipality or municipal entity during
the financial year to which the report relates;
(b) to provide a report on performance against the budget of the municipality or
municipal entity for that financial year; and
49
(c) to promote accountability to the local community for the decisions made
throughout the year by the municipality or municipal entity.
Section 121 (3) of the MFMA requires that, the annual report of a municipality must
include –
(a) the annual financial statements of the municipality, and in addition, if section
122(2) applies, consolidated annual financial statements, as submitted to the
Auditor-General for audit in terms of section 126(1);
(b) the Auditor-General’s audit report in terms of section 126(3) of those financial
Statements
(c) the annual performance report of the municipality prepared by the municipality in
terms of section 46 of the Municipal Systems Act;
(d) the Auditor- General’s audit report in terms of section 45 (b) of the Municipal
Systems Act;
(e) an assessment by the municipality’s accounting officer of any arrears on
municipal taxes and service charges;
(f) an assessment by the municipality’s accounting officer of the municipality’s
performance against the measurable performance objectives referred to in
section 17(3)(b) for revenue collection from each revenue source and for each
vote in the municipality’s approved budget for the relevant financial year;
(g) particulars of any corrective action taken or to be taken in response to issues
raised in the audit reports referred to in paragraphs (b) and (d);
(h) any explanations that may be necessary to clarify issues in connection with the
financial statements;
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(i) any information as determined by the municipality;
(j) ant recommendations of the municipality’s audit committee; and
(k) any other information as may be prescribed.
Internal auditing
Internal audit unit
Section 165 (1) of the Municipal Finance Management Act states that, each
municipality and municipal entity must have an internal audit unit, subject to subsection
(3). Subsection (2) further states that, the internal audit unit of a municipality or
municipal entity must –
(a) prepare a risk-based audit plan and internal audit program for each financial
year;
(b) advise the accounting officer and report to the audit committee on the
implementation of the internal audit plan and matters relating to –
(i) internal audit;
(ii) internal controls;
(iii) accounting procedures and practices;
(iv) risk and risk management;
(v) performance management;
(vi) loss control; and
(vii) compliance with this Act, annual Division of Revenue Act and any other
applicable legislation;
(c) perform such other duties as may be assigned to it by the accounting officer.
Subsection (3) reads that, the internal audit function referred to in subsection (2) may
51
be outsourced if the municipality or municipal entity requires assistance to develop its
internal capacity and the council of the municipality or the board of directors of the
entity has determined that this feasible or cost-effective.
Benefits of internal auditing unit
- Improve transparency, accountability and efficiency;

- Discourage fraud and corruption; and
- Enhance service delivery.
External auditing
Auditor-General acts as an external auditor whose functions are described in section

188 of the 1996 Constitution and further regulated by the Public Audit Act (Act no. 25
of 2004), which mandates the AG to perform constitutional and other functions.
Audit opinions
- Unqualified – the best;

- Qualified – good, but with issues that need to be addressed;
- Adverse – very bad and implies there was an attempt to mislead; and
- Disclaimer – very bad and information is not available at all.
Audit committees
Section 166 (1) of the Municipal Finance Management Act provides that, each
municipality and each municipality entity must have an audit committee subject to
subsection (6). An audit committee is an independent advisory body which must –
(a) advise the municipal council, the political office-bearers, the accounting officer
and the management staff of the municipality, or the board of directors, the
accounting officer and the management staff of the municipal entity on matters
relating to -
(i) internal financial control and internal audits;
52
(ii) risk management;
(iii) accounting policies;
(iv) the adequacy, reliability and accuracy of financial reporting and
Information;
(v) performance management;
(vi) effective governance;
(vii) compliance with this Act, the annual Division of Revenue Act and any
other applicable legislation;
(viii) performance evaluation; and
(xi) any other issues referred to it by the municipality of municipal entity
(b) review the annual financial statements to provide the council of the municipality
or, in the case of a municipal entity, the council of the parent municipality and the
board of directors of the entity, with authoritative and credible view of the
financial position of the municipality of municipal entity, its efficiency and
effectiveness and its overall level of compliance with this Act, the annual Division
of revenue Act and any other applicable legislation
(c) respond to the council on any issues raised by the Auditor-General in the audit
Report;
(d) carry out such investigations into the financial affairs of the municipality or
municipal entity as the council of the municipality, or in the case of a municipal
entity, the council of the parent municipality or board of directors of the entity,
may request; and
(e) perform such other functions as may be prescribed.
53
In performing its functions, an audit committee –
(a) has access to financial records and other relevant information of the
municipality or municipal entity; and
(b) must liaise with –
(i) the internal audit unit of the municipality; and
(ii) the designated by the Auditor-General to audit the financial statements of
the municipality or municipal entity.
An audit committee –
(a) consist of at least three persons with appropriate experience, of whom the
majority may not be in the employ of the municipality or municipal entity, as the
case may be; and
(b) meet as often as is required to perform its functions, but at least four times a
year
The members of an audit committee must be appointed by the council of the

municipality or, in the case of a municipal entity, by the council of the parent
municipality. One of the members who is not in the employ of the municipality or
municipal entity, must be appointed as the chairperson of the committee. No councillor
may be a member of an audit committee.
Financial misconduct
The accounting officer of a municipality commits an act of financial misconduct if that

accounting officer deliberately or negligently –
(a) contravenes a provision of this Act;
(b) fails to comply with a duty imposed by a provision of this Act on the accounting
officer of a municipality;
54
(c) makes or permits, or instructs another official of the municipality to make, an
unauthorised, irregular or fruitless and wasteful expenditure; or
(d) provides incorrect or misleading information in any document which in terms of
a requirement of this Act must be –
(i) submitted to the mayor or the council of the municipality, or to the Auditor-
General, the National Treasury or other organ of state; or
(ii) made public
The chief financial officer of a municipality commits an act of financial misconduct if

that officer deliberately or negligently –
(a) fails to carry out a duty delegated to that officer in terms of section 79 or
81(1)(e);
(b) contravenes or fails to comply with a condition of any delegation of a power or
duty in terms of section 79 or 81 (1)(e)
(c) makes or permits, or instructs another official of the municipality to make, an
unauthorised, irregular or fruitless and wasteful; or
(d) provides incorrect or misleading information to the accounting officer for the
purposes of a document referred to in subsection (1)(d) of the MFMA. Subsection (3)
of the MFMA states that, a senior manager or other official of a municipality exercising
financial management responsibilities and to whom a power or duty was delegated in
terms of section 79, commits an act of financial misconduct if that senior manager or
official deliberately or negligently –
(a) fails to carry out the delegated duty;
(b) contravenes of fails to comply with a condition of the delegated power or
duty;
(c) makes an unauthorised, irregular or fruitless and wasteful expenditure; or
55
(d) provides incorrect or misleading information to the accounting officer for the
purposes of a document referred to in subsection (1)(d) of the MFAMA.
Subsection 4 of the MFMA reads that, a municipality must –
(a) investigate allegations of financial misconduct against he accounting officer, the
chief financial officer, a senior manager or other official of the municipality
unless those allegations are frivolous, vexations, speculative or obviously
unfounded; and
(b) if the investigation warrants such a step, institute disciplinary proceedings
against the accounting officer, chief financial officer or that senior manager or
other official in accordance with systems and procedure referred to in section 67
of the Municipal Systems Act, read with Schedule 2 of that Act
1. Explain the capital and operating budgets.
2. What are the responsibilities of mayors in the budget process.
3. Write notes on supply chain management.
4. Write notes on public-private partnerships.
5. What is the role of the internal audit unit and audit committee in the management
of municipal finances.
6. What constitutes a financial misconduct?
56
CHAPTER 4
Local Government Turnaround Strategy (LGTAS)
According to the Local Government Turnaround Strategy (2009), Cabinet recognised

that problems in local government are both a result of internal factors within the direct
control of municipalities as well as external factors over which municipalities do not
have much control. The internal factors relate to issues such as quality of decision-
making by Councillors, quality of appointments, transparency of tender and
procurement systems and levels of financial management and accountability,
The external factors relate to revenue base and income generation potential,
inappropriate legislation and regulation, demographic patterns and trends, macro and
micro economic conditions, undue interference by political parties and weaknesses in
national policy, oversight and Inter-Governmental Relations (IGR). The twin over-
arching aim of the Turnaround Strategy is to:
1. Restore the confidence of the majority of our people in our municipalities, as the
primary delivery machine of the developmental state at local level.
2. Re-build and improve the basic requirements for a functional, responsive,
accountable, effective and efficient developmental local government.
LGTAS is a national programme driven by the national Department of Co-operative

Government and Traditional Affairs and Provincial Departments of Local Government
for the development of a turn-around strategy for local government for the two periods
2010-2012 and 2011-2014. LGTAS is informed by the State of Local Government
Report of 2009 and an assessment of all 283 municipalities made in August 2009.
LGTAS is a national programme driven by the national Department of Co-operative

Government and Traditional Affairs and Provincial Departments of Local Government
for the development of a turn-around strategy for local government for the two periods
57
2010-2012 and 2011-2014. LGTAS is an interventionist approach meant to make a
difference at the local government sphere. LGTAS is meant to address the root causes
of all the challenges facing local government and to live a legacy of effective and
functional municipalities.
Key programmes of LGTAS
- operation clean audit;
- clean debt;
- clean towns and cities; and
- infrastructure and local economic development.
The five strategic objectives of the LGTAS are to:
1. Ensure that municipalities meet basic needs of communities. This implies that an
environment is created, support provided and systems built to accelerate quality
service delivery within the context of each municipality’s conditions and needs.
2. Build clean, responsive and accountable local government. Make sure that
systems and structures and procedures are developed and enforced to deal with
corruption, maladministration and ensure that municipalities communicate and
account to communities.
3. Improve functionality, performance and professionalism in municipalities.
Ensure that the core administrative and institutional systems are in place and are
operational to improve performance.
4. Improve national and provincial policy and support and oversight to local
government.
5. Strengthen partnerships between local government, communities and civil
58
society. Ensure that communities and other development partners are mobilised to
partner with municipalities in service delivery and development.
Focus areas to be covered during LGTAS process
- institutional transformation and organisational development;
- basic service delivery;
- local economic development;
- financial management;
- good governance and public participation;
- IDP;
- Spatial planning and development;
- legal services;
- disaster management; and
- ITC.
Expected outcomes of LGTAS (Ten point plan)
- improved quality and quantity of basic services;
- improved local economic development;
- improved alignment of IDPs with other sector departments;
- refined ward committee model;
- strengthened administrative and financial capabilities of municipalities;
- create a single window, coordinator, monitoring and evaluation of service delivery
implementation among all government departments;
- uprooting fraud and corruption, nepotism and all forms of maladministration
59
affecting local government;
- develop a coherent and cohesive system of governance and more equitable
intergovernmental fiscal system;
- develop and strengthen a political and administratively stable system of
municipalities; and
- restore the institutional integrity of municipalities.
BACK TO BASICS APPROACH

Local government is a primary point of delivery and is where most citizens interface
with government. The vision of a developmental local government system was that it
would be the building block on which the reconstruction and development of our
country and society was built, a place in which citizens of our country could engage in
a meaningful and direct way with the institutions of the state. Local has been a primary
site for the delivery of services in South Africa since 1994.
Tremendous progress in delivering water, electricity, sanitation and refuse removal at

local level has been made yet the despite these achievements, the local governance
system is a cause for concern. It is clear much needs to be done to support, educate
and where needed, enforce implementation. The goal of the “Back to basics” approach
is improve the functioning of municipalities to better serve communities by getting the
basics right.
What makes a good municipality?
 Political stability, functional structures, healthy political/administration interface;

 Responsive to service needs, infrastructure well maintained;
 Institutional continuity, clear policy and delegation framework;
 High collection rate, 7% on maintenance, CAPEX spent, clean audits;
 Community satisfaction, regular engagements and feedback.
What makes a municipality ‘AT RISK’?
60
 Signs of political instability, excessive interference in admin or SCM;
 Slow responses to service failures, escalating utility losses or theft;
 Some critical positions not filled, some managers not qualified;
 Low collection rates, CAPEX not spent, declining audit opinions;
 Growing community protests, lack of feedback mechanisms.
What makes a dysfunctional municipality?
 High degree of instability, fraud and corruption, committees do not meet;

 Collapse in service delivery, outages, asset theft, poor maintenance;
 Incompetent managers, many vacancies, no delegation;
 Chronic underspending, high debtors, no accountability, disclaimers;
 Community dissatisfaction, high number of community protests (COGTA, EC,
2014).
Building blocks of Back to Basics approach
1. Good Governance
Good governance is at the heart of the effective functioning of municipalities.

Municipalities will be constantly monitored and evaluated on their ability to carry out
the following:
 The holding of Council meetings as legislated;

 The functionality of oversight structures, s79 committees, audit committees
and District IGR forums;
 Whether or not there has been progress following interventions over the last
3 – 5 years;
 Assess the existence and efficiency of Anti-Corruption measures;
 The extent to which there is compliance with legislation and the enforcement
of by-laws;
 The rate of service delivery protests and approaches to address them.
2. Public Participation
61
Measures will be taken to ensure municipalities engage with their. Compliance will be
enforced with the provisions of the Municipal Systems Act on community participation.
Municipalities must develop affordable and efficient communication systems to
communicate regularly with communities and disseminate urgent information. The
basic measures to be monitored include:
 Assessing the existence of the required number of functional Ward committees;

 The percentage of ward committee’s grants spent;
 The number of council effective public participation programmes conducted;
 The regularity of community satisfaction surveys carried out.
3. Financial Management
Sound financial management is integral to the success of local government. National

Treasury has legislated standards and reporting requirements, and based on
monitoring of the indicators, key areas will be identified emerging from the profiles and
partner with National Treasury to support the remedial process. Performance against
the following basic indicators will be constantly assessed.
 The number of disclaimers in the last 3 – 5 years;

 Whether the budgets are cash backed;
 The percentage of revenue collected;
 The extent to which debt is services;
 The efficiency and functionality of supply chain management.
4. Infrastructure services
The planning, implementation and maintenance of basic infrastructure is critical for

sustaining basic standards of living and economic activity in our towns and cities. All
municipalities will develop service standards for each service, and will establish
systems for monitoring adherence to these standards. Municipalities will be required
to report on ward-level service delivery plans. We expect municipalities to perform the
following basic activities, and the performance indicators will measure the ability of our
municipalities to do so:
62
 Develop fundable consolidated infrastructure plans;
 Ensure infrastructure development maintenance and reduce losses with
respect to
o Water and sanitation.
o Human settlements.
o Electricity.
o Waste management.
o Roads.
o Public transportation
 Ensure the provision of free Basic Services and the maintenance of indigent
register
5. Institutional capacity
There has to be a focus on building strong municipal administrative systems and

processes. It includes ensuring that administrative positions are filled with competent
and committed people whose performance is closely monitored. Targeted and
measurable training and capacity building will be provided for Councillors and
municipal officials so that they are able to deal with the challenges of local governance
as well as ensuring that scarce skills are addressed through bursary and training
programmes. The basic requirements to be monitored include:
 Ensuring that the top six post (Municipal Manager, finance, infrastructure,
corporate services, community development and development planning)
vacancies are filled by competent (qualifications);
 That the municipal organogram are realistic, underpinned by a service delivery
model and affordable;
 That there are implementable human resources development and management
programmes;
 There are sustainable platforms to engage organised labour to minimise
disputes and disruptions.
KHAWULEZA DISTRICT DEVELOPMENT MODEL
63
The President in the 2019 Presidency Budget Speech (2019) identified the “pattern of
operating in silos" as a challenge which led to “lack of coherence in planning and
implementation and has made monitoring and oversight of government's programme
difficult". The consequence has been non optimal delivery of services and diminished
impact on the triple challenges of poverty, inequality and employment. The President
therefore called for the rolling out of “a new integrated district based approach to
addressing our service delivery challenges [and] localise[d] procurement and job
creation, that promotes and supports local businesses, and that involves
communities."
The new District Development Model aims to improve the coherence and impact of
government service delivery with focus on 44 Districts and 8 Metros around the
country as development spaces that can be used as centres of service delivery and
economic development, including job creation. The District Development Model has
been approved by government structures, including Cabinet.
The model will be piloted in two Districts (OR Tambo; Waterberg) and a Metro
(Ethekwini) that have elements of Rural, Mining and Urban.
The new District Development Model offers a number of opportunities for the
development of a #DisabilityInclusiveSA through strategic implementation of the White
Paper on the Rights of Persons with Disabilities at community level. This is therefore
a call to Executive Authorities, all Accounting Officers, all programme managers
across all spheres of government, working with organs of civil society and the private
sector, to ensure that access and participation barriers which marginalise persons with
disabilities are removed, and that all planning, budgeting and service delivery are
designed using universal design principles, are disability equitable and offer
opportunities for persons with disabilities as drivers of community and economic
development.
A new integrated planning model for Cooperative Governance
 The District/Metro spaces offer the appropriate scale and arena for
intergovernmental planning coordination.
 The District Model provides both an Institutional Approach and Territorial
Approach (geographical space) focus.
64
 The 44 Districts and 8 Metros are developmental spaces (IGR Impact Zones) can
be the strategic alignment platforms for all three spheres of government where
One Plan for each space guides and directs all strategic investments and projects
for transparent accountability.
 The District Model aims to address service delivery challenges and speed up
service delivery and economic development, including job creation. All the 52
Plans will harmonise IDPs and create interrelated, interdependent as well as
independent development hubs supported by comprehensive detailed plans.
The new District Development Model is anchored in the current government
legislations and policies
 The new District Development Model brings to action the Khawuleza approach
which is a call for accelerated service delivery.
 Under this model, district municipalities will be properly supported and
adequately resourced to speed up service delivery.
 The Model takes forward key government plans and reinforces the existing
policies geared to ensuring service delivery.
 The new model contributes to the achievements of the seven Apex Priorities
announced by the President in the SoNA.
 The model signals a shift from using more 139 (1) to section 154 of the
constitution emphasizing closer support to Local Government by both National
and Provincial spheres.
 The new model brings to life the realization of the ideal for Cooperative
Governance
Development will be pursued through single and integrated plans per district.
 The district-driven development model is directed at turning plans into action,

and ensuring proper project management and tracking.
 District Development Model will be pursued through single and integrated
plans per district which will be further synchronised with Integrated
Development Plans in municipalities.
 The plans will elaborate the key transformation processes required to achieve
long-term strategic goals and a desired future in each of the 44 districts and
eight metros.
65
 Each district plan will outline the role of each sphere of government, prioritising
the following:
 Managing urbanisation, growth and development;
 Supporting local economic drivers;
 Accelerating land release and land development;
 Investing in infrastructure for integrated human settlement, economic
activity and the provision of basic services; and
 Addressing service delivery in municipalities.
The plan is an inter and intra governmental society-wide Social Compact
 The model prioritises social partnerships and collaboration with all sectors of
society and communities in addressing service bottlenecks.
 The model aims to strengthen community participation and advocates for
cohesive communities.
 The model places communities at the heart of service delivery and mobilising
citizens and civil society to support the implementation of long-term plans that
outline how best to improve the lives.
 It will have considerable impact if members of the community become active
participants and make use of the available opportunity to do things differently
with the new model.
 More importantly, citizens who have burning issues will be responded to
immediately by municipalities.
A more efficient government is our priority
 The National Development Plan set course towards a developmental state

motivated by 25 years of democracy experience In realising vision 2030 we
require collaboration between all sections of society and strong leadership by
government.
 If we are to address the triple challenges of poverty, inequality and
unemployment we need a state that is capable of playing a transformative and
developmental role.
 This requires well run and effectively coordinated state institutions staffed by
skilled public servants who are committed to the public good and capable of
delivering consistently high-quality services for all South Africans.
66
 This model aims to overcome barriers to service delivery in government and
create capacity to meet increasing expectations.
 It will help government reverse the decline in state capacity and restructure
service delivery so it best serves our citizens.
The District Development Model will stimulate economic growth and benefit
local entrepreneurs.
 The District Development Model is expected to develop, support and promote

local entrepreneurs through prioritising local procurement of services and
goods.
 Municipalities will be assisted to create an enabling environment for economic
development and provide regulatory certainty in line with Back to Basic pillar of
LED.
 By providing policy and regulatory certainty, municipalities will build public and
business confidence in municipalities as places to live, work and invest.
The much needed resources will be channelled to realise the plan
 As the model seeks to secure maximum coordination and cooperation among

the national, provincial and local spheres of government.
 The coordination will require that with effect from the 2020/21 Budget cycle -
that national budgets and programmes be spatially referenced across the 44
districts and 8 Metros.
 Provincial government budgets and programmes will be spatially referenced to
districts and metros in the respective provinces.
 Municipalities will express the needs and aspirations of communities in
integrated development plans for the 44 districts and 8 Metros
Eastern Cape municipalities
Doing Well Potential to do well Not doing well

Umzimvubu local Alfred Nzo Mbashe Local Municipality
districtmunicipality
Amathole district Nxuba Local municipality Mhlontlo Local Municipality
municipality
67
Ngquza Hill local Mbizana Local King Sabata Dalindyebo
Municipality
Cacadu district Mnquma Local Ngqushwa Local
municipality Municipality Municipality
Joe Gqabi district Chris Hani District Lukhanji Local Municipality
Municipality
Matatiele local Inxuba Yethemba Intsika Yethu
Nkonkobe local Tsolwana Local Ikwezi Local Municipality
municipality Municipality
Nyandeni local Emalahleni Local Makana Local Municipality
municipality Municipality
Engcobo LM Blue Crane Local Sundays River Local
Municipality
Port St Johns Local Kou-Kama Local Gariep Local Municipality
Municipality
Camdeboo local Sakhisizwe Local OR Tambo District
municipality municipality
Senqu local municipality Kouga Local Great Kei Local
Elundini Local Malestwai Local Inkwanca Local
Municipality Municipality
Ndlambe Local Baviaans Local
municipality
Buffalo city
Nelson Mandela Bay
Ntabankulu LM
Amahlathi Local
Source: Department of Cooperative Governance and Traditional Affairs, E.C. (2014)
1. List the key programmes of the Local Government Turnaround Strategy ( LGTAS).
68
2. Discuss the five strategic objectives of LGTAS.
3. What are outcomes of LGTAS?
4. What makes a good municipality?
5. What makes a bad municipality?
6. What makes a municipality ‘AT RISK’?
7. Discuss the building blocks of the back to basic approach?
69
CHAPTER 5
Rights and duties of municipal councils
The council of a municipality has the right to-
(a) govern on its own initiative the local government affairs of the local
community;
(b) exercise the municipality’s executive and legislative authority, and to do so
without improper interference; and
(c) finance the affairs of the municipality by-
(i) charging fees for services; and
(ii) imposing surcharges on fees, rates on property and, to the extent authorised
by national legislation, other taxes, levies and duties.
(2) The council of a municipality, within the municipality’s financial and administrative
capacity and having regard to practical consideration, has the duty to –
(a) exercise the municipality’s executive and legislative authority and use the
resources of the municipality in the best interest of the local community
(b) provide, without favour or prejudice, democratic and accountable
government;
(c) encourage the involvement of the local community;
(d) strive to ensure that municipal services are provided to the local community in
a financially and environmentally sustainable manner;
(e) consult the local community about –
(i) the level, quality, range and impact of municipal services
provided by the municipality, either directly or through another service
70
provider; and
(ii) the available options for service delivery
(f) give members of the local community equitable access to the municipal
services to which they are entitled.
(g) promote and undertake development in the municipality;
(h) promote gender equity in the exercise of the municipality;
(i) promote a safe and healthy environment in the municipality; and
(j) contribute, together with other organs of state, to the progressive realisation of
the fundamental rights contained in sections 24, 25, 26, 27 and 29 of the
Constitution.
(3) A municipality must in the exercise of its executive and legislative authority
respect the rights of citizens and those of other persons protected by the Bill of
Rights.
Rights and duties of members of local community
(1) Members of the local community have the right –
(a) through mechanisms and in accordance with processes and procedures
provided for in terms of this Act or other applicable legislation to-
(i) contribute to the decision-making processes of the municipality; and
(ii) submit written or oral recommendations, representations and complaints to
the municipal council or to another political structure or political office
bearer or the administration of the municipality;
(b) to prompt responses to their written or oral communications, including
complaints, to the municipal council or to another political structure or political
71
office-bearer or administration of the municipality
(c) to be informed of decisions of the municipal council, or another political
structure or any political office-bearer of the municipality, affecting their rights,
property and reasonable expectations;
(d) to regular disclosure of state of affairs of the municipality, including its finances;
(e) to demand that proceedings of the municipal council and those of its committees
must be -
(i) open to the public, subject to section 20;
(ii) conducted impartially and without prejudice; and
(iii) untainted by personal self-interest;
(f) to the use and enjoyment of public facilities; and
(g) to have access to municipal services which the municipality provides, provided
the duties set out in subsection (2) (b) are complied with.
(2) Members of the local community have the duty –
(a) when exercising their rights, to observe the mechanisms, processes and
procedures of the municipality;
(b) where applicable, and subject to section 97(1)(c), to pay promptly
service fees, surcharges on fees, rates on property and other taxes, levies
and duties imposed by the municipality;
(c) to respect the municipal rights of other members of the municipality;
(d) to allow municipal officials reasonable access to their property for the
performance of municipal functions; and
(e) to comply with by-laws of the municipality applicable to them.
72
Duties of municipal administration
(1) A municipality’s administration is governed by the democratic values and
principles embodied in section195 (1) of the Constitution.
(2) the administration of a municipality must-
(a) be responsive to the needs of the local community;
(b) facilitate a culture of public service and accountability amongst staff;
(c) take measures to prevent corruption;
(d) establish clear relationships, and facilitates co-operation and
communication, between it and the local community.
(e) give members of the local community full and accurate information about
the level and standard of municipal services they are entitled to receive;
and
(f) inform the local community how the municipality is managed, of the costs
involved and the persons in charge.
Local government and traditional leadership
Recognition
Section 211 of the RSA Constitution Act (Act 108 of 1996) (1) provides that the
institution, status and role of traditional leadership, according to customary law, are
recognised, subject to the constitution. Subsection (2) provides that, a traditional
authority that observes a system of customary law may function subject to any
applicable legislation and customs, which includes amendments to, or repeal of, that
legislation or those customs.
Subsection (3) the courts must apply customary law when that law is applicable,
subject to the Constitution any legislation that specifically deals with customary law.
73
Role of traditional leaders
Section 212 (1) states that national legislation may provide for a role for traditional
leadership as an institution at local level on matters affecting local communities.
Subsection (2) reads that to deal with matters relating to traditional leadership, the role
of traditional leaders, customary law and the customs of communities observing a
system of customary law -
(a) national or provincial legislation may provide for the establishment of houses
of traditional leaders; and
(b) national legislation may establish a council of traditional leaders.
The White Paper on Local Government (1998) further states that, their functions
include among others:
 Acting as head of the traditional authority, and as such exercising limited

legislative powers and certain executive and administrative powers;
 Presiding over customary law courts and maintaining law and order;
 Consulting with traditional communities through imbizo/lekgotla;
 Assisting members of the community in their dealings with the state;
 Advising government on traditional affairs through the Houses and Council of
Traditional Leaders;
 Convening meetings to consult with communities on needs and priorities and
providing information;
 Protecting cultural values and providing a sense of community in their areas
through a communal social frame of reference;
 Being spokespersons generally of their communities;
 Being custodians and protectors of the community’s customs and general
welfare.
Public/ community participation
The Constitution of South Africa Act (Act no.108 of 1996) and key legislation such as
Chapter 4 of the Municipal Systems Act (Act no. 32 of 2000) and Chapter 4 of the
74
Municipal Structures Act (Act no. 117 of 1998) provide a powerful legal framework for
participatory local democracy.
According to the South African Local Government Association (2011:161)

“international experience has shown that citizen and community participation is an
essential part of effective and accountable governance at local level. One important
way of achieving successful and lasting models to ensure that citizen participation
takes place is through establishing structured and institutionalised frameworks for
participatory local governance. Structured and institutionalised models of participation
generally work when citizens see them as legitimate and credible, where there is
political commitment to their implementation and they have legal status”.
Section 16 (1) of the Municipal Systems Act (Act no. 32 of 2000) provides that, a
municipality must develop a culture of municipal governance that complements formal
representative government with a system of participatory governance, and must for
this purpose –
(a) encourage, create conditions for, the local community to participate in the affairs
of the municipality, including in –
(i) the preparation, implementation and review of its integrated development
plan in terms of Chapter 5;
(ii) the establishment, implementation and review of its performance
Management system in terms of Chapter 6;
(iii) the monitoring and review of its performance, including the outcomes and
Impact of such performance;
(iv) the preparation of its budget; and
(v) strategic decisions relating to the provision of municipal services in terms
of chapter 8;
75
(b) contribute to building the capacity of –
(i) the local community to enable it to participate in the affairs of the
municipality; and
(ii) councillors and staff to foster community participation; and
(c) use its resources, and annually allocate funds in its budget, as may be
appropriate for the purpose of implementing paragraphs (a) and (b)
(2) subsection (1) must not be interpreted as permitting interference with a municipal
council’s right to govern and to exercise the executive and legislative authority of
the municipality.
Mechanisms, processes and procedures for community participation
Section 17 (1) of the Municipal Systems Act (Act no. 32 of 2000 states that participation
by the local community in the affairs of the community must take place through –
(a) political structures for participation in terms of the Municipal Structures Act;
(b) the mechanisms, processes and procedures for participation in municipal
governance established in terms of this Act.
(c) councillors; and
(d) generally applying the provisions for participation as provided for in this Act.
Subsection (2) provides that, a municipality must establish appropriate mechanisms,

processes and procedures to enable the local community to participate in the affairs
of the municipality, and must for this purpose provide for –
(a) receipt, processing and consideration of petitions and complaints lodged by
members of the local community;
(b) notification and public comment procedures, when appropriate;
(c) public meetings and hearings by the municipal council and other political
76
structures and political office-bearers of the municipality, when appropriate;
(d) consultative sessions with locally recognised community organisations and where
appropriate, traditional authorities; and
(e) report back to the local community
Subsection (3) further states that, when establishing mechanisms, processes and
procedures in terms of subsection (2) the municipality must take into account the
special needs of –
(a) people who cannot read or write;
(b) people with disabilities;
(c) women; and
(d) other disadvantaged groups.
Subsection (4) reads that, a municipality may establish one or more advisory
committees consisting of persons who are not councillors to advise the council on any
matter within the council’s competence. When appointing the members of such a
committee, gender representativity must be taken into account.
1. What are the rights and duties of municipal councils?
2. What are the rights and duties of members of the community?
3. What are the duties of municipal administration?
4. Do traditional leaders have any role to play in service delivery?
5. Write notes on public participation at the local sphere of government.
References
77
Cloete, F. 1995. Local Government Transformation in South Africa. Pretoria: van
Schaik.
Craythorne, D.L. 2001. (5th ed) Municipal Administration: The handbook. Mercury
Crescent: Juta & Co Ltd.
Davids, I., Theron, F. & Maphunye, K.J. 2005. Participatory Development in South
Africa: A developmental management perspective. Pretoria: Van Schaik Publishers.
De Villiers, B. 1992. Regional Government in the new South Africa. Pretoria: HRSC
Publishers.
Du Toit, D.F.P. & van der Waldt, G. 1997. Public Management: The Grassroots.
Kenwyn: Juta & Co Ltd.
Du Toit, D.F.P. & van der Waldt, G. 1990. Public administration and Management: The
Grassroots. Kenwyn:Juta & Co Ltd.
Du Toit, D.F.P., Knipe, A., van Niekerk, D., van der Waldt, G. & Doyle, M. 2001.
Service Excellence in Governance. Sandown: Heinemann Publishers Pty Ltd.
Education and Training Unit. 2002. Local Government in South Africa. Johannesburg.
Education and Training Unit.
Gildenhuys, J.S.H. 1997. Restructuring your Local Government: A practical guide.

Pretoria: Van Schaik.
Gildenhuys, J.S.H. 1997. Introduction to Local Government Finance: A South African

Perspective. Pretoria: Van Schaik.
Ijeoma E. 2013. South Africa’s Public Administration in Context. Pretoria. Verity

Publishers
Parnell, S., Pieterse, E., Swilling, M. & Wooldridge, D. 2002. (eds) Democratising
Local Government: The South African Experiment. Landsdowne: University of Cape
Town Press.
Reddy, P.S. 1996 (eds) Readings in Local Government Management and

Development: A Southern African Perspective. Cape Town: Oxford University Press.
Reddy, P.S. 1999. (eds) Local Government Democratisation and Decentralisation: A

Review of the Southern African Region. Kenwyn: Juta & Co. Ltd.
Reddy, P.S., Sing, D. & Moodley, S. 2003. Local Government Financing and
Development in Southern Africa. Cape Town: Oxford University Press.
Thornhill, C,. and Cloete, J.J.N. 2014: South African Municipal Government and
Administration. Pretoria. Van Schaik Publishers.
78
Van der Waldt, G., Venter, A., van der Waldt, C., Phutigae, K., Khalo, T., van Niekerk,
D. And Nealer, E. 2007. Municipal Management: Serving the people. Lansdowne: Juta
& Co. Ltd.
Zybrands, W. 2006. (eds) “Local Government”, In Venter, A. & Langsberg, C. (3 rd ed)

Government and Politics in the new South Africa. Pretoria: Van Schaik Publishers.
Official publications
Department of Provincial and Local Government, 1998. White Paper on Local

Government. Pretoria: Government Printer.
Department of Provincial and Local Government, 2002. Local Economic Development

Policy Paper. Pretoria: Department of Provincial and Local Government.
Department of Provincial and Local Government. 1998. Local Government: Municipal

Structures Act (Act No 117 of 1998). Pretoria: Government Printer.
Department of Finance. 2003. Local Government: Municipal Finance Management Act

(Act No 56 of 2003). Pretoria. National Treasury.
Department of Provincial and Local Government, 1993. Local Government Transition

Act 1993 (No. 209 of 1993). Pretoria: Government Printer.
Department of Provincial and Local Government, 1997. Organised Local Government,

1997 (Act No 52 of 1997). Pretoria: Government Printer.
Department of Provincial and Local Government, 2001. Local Government: Municipal

Planning and Performance Management Regulations 2001. Pretoria. Government
Printer.
Department of Provincial and Local Government. 2003. Traditional Leadership and

Governance Framework Amendment Act 2003 (No. 41 of 2003). Pretoria: Government
Printer.
Department of Provincial and Local Government. 2005. Intergovernmental Framework

Act (Act No. 13 of 2005). Pretoria Government Printer.
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Turnaround Strategy. Pretoria. Government Printer.
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Governance Framework Amendment Act 2009 (No. 23 of 2009). Pretoria. Government
Printer.

Systems Amendment Act 2011 (No. 7 of 2011). Pretoria. Government Printer.
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Department of Cooperative Governance and Traditional Affairs .2014. Back to basic,
Pretoria. Government Printer.
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Systems Act (Act No 32 of 2000). Pretoria: Government Printer.
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councillors. Pretoria. SALGA.
80

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Local Government Administration

1.1 Developmental local government 6

1.2 Characteristics of developmental local government 6

1.2.1 Maximising social development and economic growth 6

1.2.2 Integrating and co-ordinating 6

1.2.3 Democratising development, empowering and redistribution 7

1.2.4 Leading and learning 7

1.3 Development outcomes of local government 8

1.3.1 Provision of household infrastructure and services 8

1.3.2 Creation of liveable, integrated cities, towns and rural areas 8

1.3.3 Local economic development 8

1.3.4 Some of the LED strategies 8

1.4 Tools and approaches for developmental local government 11

1.4.1 Integrated development planning 11

1.4.2 Performance management 13

1.4.3 Working together with local citizens and partners 13

1.5 Self-reflective questions 14

2.1 Co-operative government 15

2.2 Principles of co-operative government and intergovernmental relations 15

2.3 Municipalities in co-operative government 16

2.5 Intergovernmental structures 17

2.6 Self-reflective questions 28

3.1 Municipal finance 29

3.2 Municipal fiscal powers 29

3.3 Importance of effective municipal financial management 29

3.4 What is financial management? 30

3.5 Capital and operating budgets 31

3.6 Municipal revenue 31

3.7 Municipal budgets 33

3.8 Responsibilities of Mayors 38

3.9 Responsibilities of municipal officials 40

3.10 Supply chain management policy 44

3.11 Public-private partnerships 47

3.12 Financial reporting and auditing 49

3.13 Financial misconduct 54

3.14 Self-reflective questions 56

4.1 Local Government Turnaround Strategy (LGTAS) 57

4.2 Key programmes and the strategic objectives of the LGTAS 58

4.3 Expected outcomes of LGTAS 59

4.4 Back to basic approach 60

4.5 What makes a good municipality? 62

4.6 What makes a municipality “AT RISK”? 62

4.7 What makes a dysfunctional municipality? 62

4.8 Building blocks of back to basics approach 62

4.9 Self-reflective questions 65

5.1 Rights and duties of municipal councils 66

5.2 Rights and duties of members of local community 67

5.3 Duties of municipal administration 69

5.4 Local government and traditional leadership 69

5.5 Public/ community participation 70

5.6 Self-reflective questions 73

By the end of this module you will be expected to:

- To understand developmental local government;

Developmental local government

The White Paper on Local Government (1998), conceptualises and defines

Characteristics of developmental local government

Maximising social development and economic growth

Integrating and coordinating