End of the Road: A Critical Review of the Local Government Fiscal Framework

The document argues that South Africa's local government fiscal framework is unsustainable because municipalities cannot raise sufficient own revenue to cover operating expenditures. This funding gap has led to financial distress for many municipalities and the erosion of the social wage, as affordable basic services for poor households are not maintained. The authors conclude that the original assumptions of the 1998 White Paper on Local Government are incorrect and call for a redesign of the local government structure based on empirical data regarding service costs and affordability.

• Many South African municipalities have reached a state of financial distress, failing to deliver transformative services or sustainable improvements in living standards.
• There is a significant gap between the assumed and actual ability of local governments to fund operating expenditures from property taxes and service sales; while the White Paper on Local Government assumed a 73 per cent funding rate, research suggests the actual figure is likely less than 50 per cent.
• The current fiscal framework is eroding the social wage by limiting affordable and subsidised access to basic services, which in turn increases poverty and inequality.
• The funding gap cannot be closed through the reduction of expenditure 'leakages' or through national transfers, necessitating a fundamental redesign of the local government structure.

APA

Ledger, T., & Rampedi, M. (2020). End of the Road: A Critical Review of the Local Government Fiscal Framework. Public Affairs Research Institute. https://pari.org.za/end-of-the-road-a-critical-review-of-the-local-government-fiscal-framework/

Chicago

Ledger, Tracy, and Mahlatse Rampedi. End of the Road: A Critical Review of the Local Government Fiscal Framework. Public Affairs Research Institute, 2020. https://pari.org.za/end-of-the-road-a-critical-review-of-the-local-government-fiscal-framework/.

Wikipedia

{{cite report |last1=Ledger |first1=Tracy |last2=Rampedi |first2=Mahlatse |title=End of the Road: A Critical Review of the Local Government Fiscal Framework |publisher=Public Affairs Research Institute |date=26 August 2020 |url=https://pari.org.za/end-of-the-road-a-critical-review-of-the-local-government-fiscal-framework/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ledger2020end, author = {Ledger, Tracy and Rampedi, Mahlatse}, title = {{End of the Road: A Critical Review of the Local Government Fiscal Framework}}, institution = {Public Affairs Research Institute}, year = {2020}, month = aug, url = {https://pari.org.za/end-of-the-road-a-critical-review-of-the-local-government-fiscal-framework/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }