An analysis of budget compliance measurement in South African local government best-practice financial management technical assistance programs, 2001 - 2003

Abstract

South Africa's local government financial management best-practice technical assistance program (known as MFMTAP) was to reform municipal financial management; achieve credible, realistic budgets and prevent financial failure. We consider whether a budget compliance procedure, developed by National Treasury (NT) to measure funding requirements compliance with the Municipal Finance Management Act (MFMA) focusing on 'realistic' revenue budgeting, improves our understanding of technical assistance effectiveness. We assess a metropolitan municipality's compliance before, during and after advisory assistance. The compliance procedure was robust. Potential exists for wider application to assess best-practice technical assistance (BPTA) program financial reform effectiveness. The findings from this single, important sample suggest that MFMA funding requirements are not being sustained 4 years after MFMTAP commencement, attributable to either BPTA performance or termination effects. We conclude that MFMA financial performance can be assessed by the procedure, from analysis of the metropolitan municipality performance assisted by a BPTA advisor for approximately 3 years. The analysis raises questions about BPTA program reform sustainability, but we add the caveat that conclusions cannot be drawn from a single sample metropolitan municipality, but a larger sample need be used for further methodology development to confirm its efficacy.