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Policy Brief 10 - How the Cost of Information and Communication Technology Hampers Implementation of Financial Management Reforms in Lesser-Resourced Municipalities

Currently South Africa has 278 municipalities with varying capabilities and capacity. The Municipal
Finance Management Act requires municipalities to maintain efficient, effective and transparent systems and implement proper financial record keeping. One of the key reforms spearheaded in this regard is the Municipal Standard Chart of Accounts (mSCOA). Implementation of mSCOA is information and communication technology intensive and thus expensive. A consequence of this is that many municipalities will not be able to achieve compliance by the compulsory implementation date of July 2017. Given the potential benefits associated with ensuring a national standard around financial reporting at the local government level, it is recommended that ring-fenced funding in respect of mSCOA implementation be made available for lesser-resourced municipalities and that technical assistance be provided
to the most under-resourced municipalities to assist with change management.

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Policy Brief 9 - Funding and Policy Framework for Supporting Urban Informal Employment

The South Africa urban labour market structure is undergoing a transformation of a different kind. One
which is uniquely characterised by the coinciding of high unemployment and low informal employment.
This is instead of the typical growth of formal employment which is associated with rapid urbanisation. Throngs of rural and peri-urban job seekers migrate to the cities, attracted by the prospects of employment and income. However, given the low formal sector labour absorption rate, many of these job seekers end up eking out a living through informal employment. This creates a policy dilemma over whether to support or discourage informality. Informality provides a cushion for over two million people, but at the same time is seen as a threat to productivity, competitiveness and fiscal receipts. As a result, the support given to the sector is often inadequate, or conceived as part of poverty reduction rather than enterprise development.
The Financial and Fiscal Commission sought to assess the role of cities and available intergovernmental transfers in harnessing informal employment. The results indicate that informal sector support and funding programmes are concentrated at national and provincial government level instead of at city level, where informal enterprise takes place. Existing interventions largely focus on the disbursement of grants and trading infrastructure, rather than addressing informal employment growth constraints holistically.

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Policy Brief 8 - The Effects of Municipal Spending on Urban Employment

South Africa has one of the highest unemployment rates in the world. Unemployment has remained above 20% since the dawn of democracy in 1994. Despite the widespread perception that unemployment levels are generally lower in urban centres, compared with the rest of the country, the reality is that urban municipalities also face unemployment levels that are almost as high as the national average. Research by the Financial and Fiscal Commission, which examined the indirect effects of municipal spending programmes on job creation, found that spending on job creation and poverty alleviation initiatives contribute positively towards employment. In particular, spending on the Expanded Public Works Programme (EPWP) and the Community Work Programme (CWP) has a significant positive effect on the total level of employment for metros, but not for other urban municipalities, namely secondary cities and large towns.

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Policy Brief 7 - The Role of Targeted Intergovernmental Transfers in Urban Poverty Reduction

The In recent years recognition of cities as engines of economic growth, and their potential role in reducing poverty, inequality and unemployment, has generated a renewed focus on designing and implementing policy to overcome the constraints on maximising the potential of urban economies. In this regard, the Financial and Fiscal Commission carried out research to provide empirical evidence on how the
structure of economic activity (the location of industries and employment) affects the economic performance of South Africa’s urban municipalities, including the metropolitan areas and secondary cities which are touted as ‘engines of growth’. The research found that greater industrial diversity has a positive impact on growth in urban municipal per capita income. The study also found that municipalities with increased human capital, in the form of residents with certificates and graduate degrees, experience higher levels of growth in per capita income.

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Policy Brief 6 - Managing the Fiscal Implications of Learner Mobility through Better Planning and Budgeting

The urban development pattern in South Africa is changing from one characterised by the movement of only job-seeking adults to urban centres to one which involves the movement of school-going children across local boundaries to schools in different urban settings. Open school choice policies enable parents and learners to vote with their feet in search of better education. These movements affect the overall functioning of the schooling system from the perspective of planning and funding, for both the sending and receiving areas. Accordingly, this research evaluates the extent to which education fiscal transfers are affected by, or responsive to, the urban transformation process, and the efficacy of provincial planning processes in addressing education delivery challenges introduced by urbanisation. The findings suggest that in managing learner mobility provinces need not only focus on the budgetary implications, but also invest in long-term planning tools that account for spatial demographic shifts and development plans.
In particular, the study recommends a need for education infrastructure transfers, and their investment within provincial boundaries, to be sensitive to learner mobility patterns in terms of location and age structure.

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