| dc.description.abstract | This study was on the financial analysis of local government institutions in the North-West
Province with specific reference to the Mafikeng Local Municipality.
The literature study on this study revealed that there is presently a dearth of research
work on local government financial analysis in South Africa. Most of the literature found
on the subject was from the United States of America and the World Bank Institute of
Local Governance.
The available research work and literature referred to financial analysis as a financial tool
with which municipalities can measure their ability to meet their financial and service
delivery obligations in the short, medium and long term. . A local government that is in a
good financial condition was defined as the one that can sustain existing delivery levels of
services to the public, withstand economic slumps and meet the demands of the
changing service needs. Revenues of such a local government should be sufficient to
meet short-term expenditure commitments as well as finance major capital expenditures
and long-term costs.
The study used a descriptive case study design, and data collected from Statistics South
Africa and Mafikeng Local Municipality were analysed within the framework of the
Financial Trend Monitoring System as established by the International County/City
Management Association (ICMA) in the United States of America.
The analysis of the economic data revealed that the Mafikeng Local Municipality's
economic base, which is predominately public-sector- dependent, is steadily shrinking
and thereby losing businesses (creating more unemployment) and narrowing the property
tax base. The Mafikeng Local Municipality is also realising a huge and increasing volume
of service debtors - Mafikeng residents collectively defaulted on over R65 million of their
municipal accounts in 2001. Compounded with the shrinking property market
(consequently resulting in less property revenues) and the unwillingness of the locals to
pay for services rendered, the exodus of businesses from Mafikeng is threatening the
economic base from which the municipality should tap its revenues to defray/liquidate
its expenditure needs without incurring any further budgetary deficits.
The analysis of the financial data revealed that above all accounts Mafikeng Local
Municipality is still liquid and its financial condition is presently not endangered, but its
economic base reflects seeds of possible financial crisis in the near future.
It is, therefore, recommended that the municipality put into place a thoroughgoing and
effective billing and debt collection strategy and revoke legislative provisions available to
it to recover delinquent revenues to enhance its liquidity (cash position). Moreover, the
Municipal Council should as a matter of urgency protect the local economy by expediting
a vigorous Local Economic Development Plan (LEDP) as part of its Integrated
Development Plan (IDP) to attract correct businesses to the area and add value to the
local economy by way of creating new job and enterprise opportunities. | en_US |
