Policy Brief 7 - Who Finances Rural Local Municipalities?
ProvinciaThe majority of financially unviable municipalities are in rural areas and depend significantly on grants to fulfil their mandate. The government’s aim is to minimise this grant dependency by amalgamating municipalities.
The Financial and Fiscal Commission (the Commission) investigated whether amalgamations result in viable municipalities, as well as the adequacy of intergovernmental transfers and possible alternative own-revenue sources that would lessen the dependency of rural municipalities on transfers. The study found that amalgamations do not necessarily result in financially viable municipalities, and (if all grants are included) the current system of transfers is adequate for some (but not all) services rendered by rural local municipalities.
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