Challenges of financial sustainability in a rural municipality : the case of the Musina Local Municipality in the Limpopo Province of South Africa

Abstract

Local governments have been identified as the main catalyst for service delivery provisions. However, challenges, such as capacity and lack of financial sustainability, means many municipalities struggle to meet this obligation. This study sought to evaluate the challenges the Musina Local Municipality faces in their attempt to manage their finances for financial sustainability. The study adopted a quantitative approach. A structured self-administered questionnaire was employed as a data collection tool from sampled respondents. Statistical Package for Social Sciences (SPSS) was used to analyse the gathered data. The findings of this study indicate that the main challenge confronting the Musina Local Municipality was the low revenue collection. This is mostly as a consequence of community members’ inability to pay for services due to their unaffordability. The findings reveal that the Musina Local municipality made most of its revenue income from property rates, services charged on tariffs and fines. As such, failure by customers often left it in financial distress. The municipality’s poor financial position leads to other challenges, such as inability to pay creditors, lack of financial reserves, diversion of grant funding to fund the operation deficits. The study, therefore, concludes that the municipality is not financially sustainable. The study recommends that the municipality should develop a sound billing and revenue collection structure and place more emphasis on revenue collection of monies owed to them for amenities rendered.