Efficiency of South African municipalities in utilising infrastructure assets in addressing water and electricity service delivery challenges.

Date
2020-02
Journal Title
Journal ISSN
Volume Title
Publisher
Stellenbosch : Stellenbosch University
Abstract
ENGLISH ABSTRACT: The demand for the efficient provision of basic services is expected in the public financial management system in a resources-constrained environment. Municipalities in South Africa have failed to distribute resources or deliver services to communities efficiently. The current demand for basic services exceeds the current supply. This is supported by ongoing services delivery protests and is an indication of the huge backlogs in the provision of water, sanitation, solid waste and electricity services. This study analyses the efficiency of asset utilisation in fulfilling business objectives specifically related to water and electricity service delivery between 2016 and 2018. The research conducts a financial analysis using the return on asset (ROA) ratio. Correlation analyses and regression analyses calculate the ROA efficiency gap between certain municipalities and selected private sector industries. Evidence emerging from the data analysis indicates that while a positive mean does exist, municipalities tend to function on different efficiency levels. Nearly 50 percent of municipalities reflected a decrease in efficiency levels between 2016 and 2018. When comparing the municipal ROA ratios to selected capital-intensive private sector businesses, the efficiency gap is significantly large. This indicates that substantial reforms are required within municipalities should they wish to focus on business-like efficiency.
AFRIKAANSE OPSOMMING: In 'n omgewing met beperkte hulpbronne is die aanvraag na die doeltreffende voorsiening van basiese dienste in die openbare finansiele bestuurstelsel verwag. Suid-Afrikaanse Munisipaliteite kan nie hulpbronne doeltreffend versprei of genoegsame basiese dienste aan gemeenskappe lewer nie. Die huidige aanvraag na basiese dienste oorskry die huidige voorsiening. Dit word gedemonstreer deur voortdurende betogings oor dienslewering en is 'n aanduiding van die groot agterstande in die voorsiening van water, sanitasie, vaste afval en elektrisiteitsdienste. Hierdie studie ontleed die doeltreffendheid van bate aanwending in die vervulling van die besigheidsdoelwitte ten opsigte van water en elektrisiteits dienslewering tussen 2016 en 2018. Hierdie navorsing doen 'n finansiele ontleding met behulp van die opbrengs op bates (ROA) verhouding. Korrelasie-ontledings en regressie-ontledings bereken die ROA-doeltreffendheidsgaping tussen sekere munisipaliteite en geselekteerde privaatsektorbedrywe. Die resultate van die data-ontleding dui daarop dat alhoewel 'n positiewe gemiddelde wel bestaan, munisipaliteite geneig is om op verskillende doeltreffendheidsvlakke te funksioneer. Bykans 50 persent van die munisipaliteite weerspieel 'n afname in doeltreffendheidsvlakke tussen 2016 en 2018. Wanneer die munisipale ROA verhoudings met geselekteerde kapitaalintensiewe ondernemings in die private sektor vergelyk word, is die doeltreffendheidsgaping aansienlik groot. Dit dui daarop dat wesenlike hervormings binne munisipaliteite vereis is as hulle op besigheidsagtige doeltreffendheid wil fokus.
Description
Thesis (MPhil)--Stellenbosch University, 2020.
Keywords
Ratio analysis, Municipal government -- South Africa, Municipal finance -- South Africa, Infrastructure (Economics) -- Municipal government -- South Africa, Inadequate municipal services -- South Africa, UCTD
Citation