Financial Performance of Local Government in Limpopo Province, 2010-2012

Abstract

Governance problems mar local government in South Africa’s Limpopo Province, especially in relation to financial management. The province received the highest rate of unsatisfactory audit outcomes between 2010 and 2012 of any province in South Africa. This paper examines the various explanations for this situation and uses the datasets from the Afrobarometer and the audit outcome reports to compare the financial performance of the Limpopo local government and its municipalities with that of other South African provinces. One key finding is that employment recruitment patterns have a major influence on financial performance of the municipalities. In particular, an “informal” cadre recruitment approach has a negative impact on local government’s financial performance. The paper thus concludes that the governing African National Congress has used a strategy that disregards competitive recruitment practices and rewards party members and those affiliated with the party with access to employment, especially in local government, which has detrimental effects on financial management of municipalities.