Open Access
Subscription Access
Municipal Services and Financial Performance of Three Metropolitan Municipalities in South Africa
Subscribe/Renew Journal
The study aimed to evaluate the level of public satisfaction in the provision of municipal services. Specifically, the study examined the relationship between municipal services and financial performances in the three metropolitan municipalities in the Gauteng province of South Africa using secondary and primary data from a survey conducted in 2019. The study is based on the theory of social contract. The study employed both qualitative and quantitative techniques to examine the level of public satisfaction on municipal services delivered to the urban residents in the study areas. Data were gathered using semi-structured interviews and the annual financial statements from the three metropolitan municipalities in the Gauteng province of South Africa. The results from financial ratio indicators confirmed that the metropolitan municipalities were in a good financial position. However, the findings from financial ratio analysis should be used with utmost caution due to the major limitations and drawbacks associated with such financial measures. The content analysis in the study revealed that the demand for basic municipal services would remain high, costly, with severe backlogs, insufficient, and often with unresponsive management practices in the study areas. Moreover, the lack of entrepreneurial, innovative, and problem-solving skills and expertise among municipal managers compromised the provision of basic municipal services, and the residents remained unsatisfied in the three metropolitan municipalities of Gauteng Province. Other factors that contributed to the poor performances are also discussed.
Keywords
Content Analysis, Financial Performance, Financial Ratio Analysis, Municipal Services, South Africa.
JEL Classification Codes : G28, H72, R51
Paper Submission Date : December 30, 2021 ; Paper sent back for Revision : July 30, 2022 ; Paper Acceptance Date : October 6, 2022 ; Paper Published Online : December 15, 2022
User
Subscription
Login to verify subscription
Font Size
Information
- Adegun, O. (2017). Developing green infrastructure in a Johannesburg informal settlement: Investigating residents' willingness to pay. Procedia Engineering, 198, 176–186. https://doi.org/10.1016/j.proeng.2017.07.081
- Alrafadi, K. M., & Md-Yusuf, M. (2011). Comparison between financial ratios analysis and balanced scorecard. American Journal of Economics and Business Administration, 3(4), 618–622. https://doi.org/10.3844/ajebasp.2011.618.622
- Auditor-General of South Africa. (2021). Consolidated general report on the local government audit outcomes. MFMA 2019–20. https://www.agsa.co.za/Portals/0/Reports/MFMA/201920/2019%20%2020%20MFMA%20Consolidated%20GR.pdf
- Bahl, R. W., Linn, J. F., & Wetzel, D. (2013). Financing metropolitan governments in developing countries. Lincoln Institute of Land and Policy.
- Berthilde, M., & Rusibana, C. (2020). Financial statement analysis and investment decision making in commercial banks: A case of bank of Kigali, Rwanda. Journal of Financial Risk Management, 9, 355–376. https://doi.org/10.4236/jfrm.2020.94019
- Budhedeo, S. H., & Pandya, N. P. (2018). Financial performance of public sector banks in India: A post reform analysis. Indian Journal of Finance, 12(10), 7–20. https://doi.org/10.17010/ijf/2018/v12i10/132491
- Chattopadhyay, S., & Das, M. (2018). Urban service delivery in West Bengal: Current scenario and new challenges. Journal of Infrastructure Development, 10(1–2), 18–36. https://doi.org/10.1177/0974930618773253
- Choi, N. (2021). Analyzing local government capacity and performance: Implications for sustainable development. Sustainability, 13(7), 3862. https://doi.org/10.3390/su13073862
- City of Mitcham. (2020, September 8). Financial sustainability policy, Version 3. Mitcham, Australia. https://www.mitchamcouncil.sa.gov.au/__data/assets/pdf_file/0034/757087/Financial-Sustainability-Policy.pdf
- Crumpton, C. D. (2018). Essential skills and responsibilities for city management and local government: Considerations concerning the American city manager model in the context of local administration in Thailand. https://doi.org/10.13140/RG.2.2.28861.51681
- Curtis, P. G., Hanias, M., Kourtis, E., & Kourtis, M. (2020). Data envelopment analysis (DEA) and financial ratios: ? pro-stakeholders' view of performance measurement for sustainable value creation of the wind energy. International Journal of Economics and Business Administration, 8(2), 326–350. https://doi.org/10.35808/ijeba/465
- Dinbabo, M. F., & Nyasulu, T. (2015). Macroeconomic immigration determinants: An analysis of 'pull' factors of international migration to South Africa. African Human Mobility Review, 1(1), 27–52. https://doi.org/10.14426/ahmr.v1i1.730
- Donatella, P. (2020). Is political competition a driver of financial performance adjustments? An examination of Swedish municipalities. Public Money & Management, 40(2), 122–130. https://doi.org/10.1080/09540962.2019.1667684
- Duque, J. C., Lozano-Gracia, N., Patino, J. E., & Restrepo, P. (2022). Urban form and productivity: What shapes are Latin-American cities? Environment and Planning B: Urban Analytics and City Science, 49(1), 131–150. https://doi.org/10.1177/2399808321999309
- Enwereji, P. C., & Kadama, F. (2018). Debt management: Payment of residential property rates in a selected district municipality in South Africa. International Journal of Economics and Financial Issues, 8(2), 277–286. https://econjournals.com/index.php/ijefi/article/view/6105
- Enwereji, P. C., & Uwizeyimana, D. (2020). Municipal consumer debt in South African municipalities: Contexts, causes, and realities. Research in World Economy, 11(3), 333–345. https://doi.org/10.5430/rwe.v11n3p333
- Erasmus, L. J., & Matsimela, T. (2020). The municipal audit committee self-review threat: The South African Dilemma. Southern African Business Review, 24(6332), 1–22. https://doi.org/10.25159/1998-8125/6332
- Essuman-Mensah, D. (2019). A study of the performance of reform institutions: Focusing on the evolution of public sector reforms in Ghana. Journal of International Development Cooperation, 14(2), 99–130. https://doi.org/10.34225/jidc.2019.14.2.99
- G?bski, ?. (2021). The impact of the crisis triggered by the COVID-19 pandemic and the actions of regulators on the consumer finance market in Poland and other European Union countries. Risks, 9(6), 102. https://doi.org/10.3390/risks9060102
- Goel, U., Bansal, N., & Sharma, A. K. (2015). Impact of corporate governance practices on working capital management efficiency: A structural equation modelling approach. Indian Journal of Finance, 9(1), 38–48. https://doi.org/10.17010//2015/v9i1/71534
- Joshi, N. A. (2022). Financial restructuring and its impact on shareholders' wealth in selected companies in India. India Journal of Finance, 16(9), 26–41. https://doi.org/10.17010/ijf/2022/v16i9/172158
- Kanyane, M. (2014). Exploring challenges of municipal service delivery in South Africa (1994 – 2013). Africa's Public Service Delivery & Performance Review, 2(1), 90–109. https://doi.org/10.4102/apsdpr.v2i1.45
- Kleynhans, E. P., & Coetzee, C. (2019). Assessment of financial conditions of South African municipalities: A unique model for KwaZulu-Natal. Southern African Business Review, 23, 1–25. https://doi.org/10.25159/1998-8125/4396
- Krantz, V., & Gustafsson, S. (2021) Localizing the sustainable development goals through an integrated approach in municipalities: Early experiences from a Swedish forerunner. Journal of Environmental Planning and Management, 64(14), 2641–2660. https://doi.org/10.1080/09640568.2021.1877642
- Loewe, M., Zintl, T., & Houdret, A. (2021). The social contract as a tool of analysis: Introduction to the special issue on “Framing the evolution of new social contracts in Middle Eastern and North African countries.” World Development, 145, 104982. https://doi.org/10.1016/j.worlddev.2020.104982
- Luká?, J., Teplická, K., ?ulková, K., & Hrehová, D. (2021). Evaluation of the financial performance of the municipalities in Slovakia in the context of multidimensional statistics. Journal of Risk and Financial Management, 14(12), 570. https://doi.org/10.3390/jrfm14120570
- Mbulawa, A. (2019). Understanding the impact of financial sustainability on South African municipalities. The Journal for Transdisciplinary Research in Southern Africa, 15(1), a656. https://doi.org/10.4102/td.v15i1.656
- McCandless, E. (2020). Resilient social contracts and peace: Towards a needed reconceptualization. Journal of Intervention and Statebuilding, 14(1), 1–21. https://doi.org/10.1080/17502977.2019.1682925
- McLaren, J. L., & Struwig, F.W. (2019). Financial ratios as indicators of financial sustainability at a South African university. Journal of Contemporary Management, 16(2), 1–26. https://doi.org/10.35683/jcm19030.0027
- Migliorelli, M. (2021). What do we mean by sustainable finance? Assessing existing frameworks and policy risks. Sustainability, 13(2), 975. https://doi.org/10.3390/su13020975
- National Treasury, Republic of South Africa. (2015). Budget review 2015. https://www.treasury.gov.za/documents/national%20budget/2015/review/fullreview.pdf
- National Treasury, Republic of South Africa. (2018). The national treasury: Budget review. Government Printers.
- Nealer, E. (2014). Municipal management: Local government and service delivery. In, G. van der Walt (ed.), Municipal management: Serving the people (2nd ed.). Juta and Company Ltd.
- Nengi, G., & Jain, A. (2022). Corporate governance and firm value – An empirical study of financial services firms in India. India Journal of Finance, 16(9), 42–53. https://doi.org/10.17010/ijf/2022/v16i9/172159
- OECD/UN-HABITAT/UNOPS. (2021). Global state of National Urban Policy 2021: Achieving sustainable development goals and delivering climate action. OECD Publishing, Paris. https://doi.org/10.1787/96eee083-en
- Parveen, H., & Showkat, N. (2017). Content analysis.e-PG Pathshala.
- Rehman, A., Jingdong, L., Du, Y., Khatoon, R., Nisar, S. K., Zhang, L., & Shahzad, T. (2015). Financial performance, ratio analysis, and evaluation of agricultural bank of China. International Journal of Economic Behavior and Organization, 3(5), 69–73. https://doi.org/10.11648/j.ijebo.20150305.11
- Sinervo, L.-M. (2020). Financial sustainability of local governments in the eyes of Finnish local politicians. Sustainability, 12(23), 10207. https://doi.org/10.3390/su122310207
- Theogene, H. Mulegi, T., & Hosee, N. (2017). The contribution of financial ratios analysis on effective decision making in commercial banks. International Journal of Management and Applied Science, 3(6), 33–40. https://www.scribd.com/document/514277110/14-381-150400875033-40-2
- Van der Walt, C. (2018). Municipal management: Serving the people. Juta and Company Ltd.
- Viet Ha, H. T., Thuy Van, V. T., & Hung, D. N. (2019). Impact of social responsibility information disclosure on the financial performance of enterprises in Vietnam. Indian Journal of Finance, 13(1), 20–36. https://doi.org/10.17010/ijf/2019/v13i1/141017
- Winarna, J., Widagdo, A. K., & Setiawan, D. (2017). Financial distress of local government: A study on local government characteristics, infrastructure, and financial condition. Global Business & Finance Review, 22(2), 34 – 47. http://dx.doi.org/10.17549/gbfr.2017.22.2.34
- Zabolotnyy, S., & Wasilewski, M. (2019). The concept of financial sustainability measurement: A case of food companies from Northern Europe. Sustainability,11(18), 5139. https://doi.org/10.3390/su11185139
- Zerihun, M. F., & Mashingo, M. P. (2022). The quest for service delivery: The case of a rural district municipality in the Mpumalanga province, South Africa. Africa's Public Service Delivery & Performance Review, 10(1), a512. https://doi.org/10.4102/apsdpr.v10i1.512
- Zorn, A., Esteves, M., Baur, I., & Lips, M. (2018). Financial ratios as indicators of economic sustainability: A quantitative analysis for Swiss dairy farms. Sustainability, 10(8), 2942. https://doi.org/10.3390/su10082942
Abstract Views: 170
PDF Views: 0