cities

3. Political interventions
• Some municipalities have top-heavy, unaffordable “political offices” that often provide
political advice on administrative matters and, in so doing, undermine and duplicate the role
of the municipal manager, chief financial officer and senior managers.
• Political interference in administrative decision-making processes (including SCM), which
compromises municipal finances. In some municipalities, the interference impedes on
revenue collection because the politicians do not want to antagonise the voting communities.
Innovation in Municipal Finances
Since 2003, municipal finance management systems and practices have steadily evolved in South
African cities. Certain themes are the focus of further innovation and learning: spatial transformation,
the green economy, smart city strategies and ways of increasing revenue through asset management
and alternative sources of funding.
Financing spatial transformation
As indicated in earlier chapters, national recognition and ownership are necessary to drive the agenda
of transforming cities, so that the legacy issues can be addressed and, more importantly, cities can be
prepared for their future roles, challenges and opportunities. This must be accompanied by serious
consideration of adequate and sustainable city financing, and demands intergovernmental fiscal reform
that recognises the medium- and long-term costs of urban spatial transformation (Smoke, 2015).
Financing major, affordable public transportation systems, massively expanding access to quality public
spaces and affordable accommodation, and ensuring inclusive, modernised urban economies (e.g. by
counteracting negative gentrification effects and avoiding new technological access divides) have fiscal
implications for urban municipalities (SACN 2015; SACN, 2016). A popular sentiment is that
municipalities must borrow to finance economic infrastructure that grows the revenue base to
contribute towards future own-revenue raising, i.e. property rates. However, growing the economy
does not necessarily result in direct revenue-raising opportunities for the municipality. For instance, the
recent expansion of public transport through the BRT represents an important infrastructure for
growing the economy, but the reality has been an increased cost burden on the municipality.
The green economy
The importance of the green economy to municipal finances is growing (SACN, 2013; 2015). 17 However,
local and provincial officials interpret regulation and legislation in the most conservative way, which is a
7
17 Chapter 5: The case for the green economy in cities and Chapter 6: Financial implications of demand-side management for electricity and water,
in SACN (2013); Chapter entitled Use of tariffs to promote efficient resource use in SACN (2015).
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