Spending Efficiency in South African Rural Local Municipalities
Spending Efficiency in South African Rural Local Municipalities

Summary/Abstract: South African rural municipalities continue to experience difficulties in executing their constitutional obligations, despite the increasing amount of resources that are being channeled to them through the intergovernmental transfer system. The main objective of this study is to evaluate the efficiency of South African rural municipalities in utilizing their resources, particularly the intergovernmental transfers, as they account for more than half of their revenues. To empirical examine this, the Output Oriented Data Envelopment Analysis (DEA) method is applied on a panel data covering the period from 2008/9 to 2012/13. The results from the Output Oriented DEA suggest that rural local municipalities are inefficient in their spending. Furthermore, the findings from the budget analysis show that these municipalities are not prioritizing their spending, as they spent more of their resources on employee costs compared to vital expenditure needs such as repairs and maintenance of existing infrastructure.

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