In this section:

This section provides a history of local government, an overview of the existing transitional system of local government, and an outline of settlement patterns and trends. It concludes by defining the challenge for local government.

1. A History of Local Government
   
2. The Current State of Local Government
   
3. Settlement Patterns and Trends
   
4. Defining the Challenge For Local Government
   
5. Concluding Comment
   
   

Apartheid has left its imprint on South Africa's human settlements and municipal institutions. Transformation requires an understanding of the historical role of local government in creating and perpetuating local separation and inequity, and the impact of apartheid on municipal institutions. Equally important is the history of resistance to apartheid at the local level, and struggles against apartheid local government.

Racial segregation

Apartheid was not the beginning of geographic, institutional and social separation at the local level. Segregation was already a policy by the time apartheid was introduced in 1948. However, the Group Areas Act, the key piece of apartheid legislation, instituted strict residential segregation and compulsory removal of black people to "own group" areas. Through spatial separation, influx control, and a policy of "own management for own areas", apartheid aimed to limit the extent to which affluent white municipalities would bear the financial burden of servicing disadvantaged black areas. The Group Areas Act restricted the permanent presence of Africans in urban areas through the pass system, and reserved a viable municipal revenue base for white areas by separating townships and industrial and commercial development.

Various attempts were made under apartheid to introduce "own management" structures for black residents at the local level. This was in part to compensate for restricted rights, and in part to bolster the political and economic privileges of racial exclusion.

• In bantustans, limited local government was established. Traditional leaders were given powers over land allocation and development matters in areas with communally owned land. Some small rural townships (the so-called "R293 towns") were given their own administrations, but these lacked real powers.
  
• In the 1960s, "Coloured" and "Indian" management committees were established as advisory bodies to white municipalities.
  
• The Bantu Affairs Administration Act of 1971 established appointed Administration Boards, which removed responsibility for townships from white municipalities.
  
• In 1977, Community Councils were introduced. Community Councils were elected bodies, but had no meaningful powers and few resources. They never gained political credibility.
  
• In 1982 Black Local Authorities replaced Community Councils. Black Local Authorities had no significant revenue base, and were seen as politically illegitimate from the start. They were rejected by popular (and sometimes violent) community mobilisation in the mid-1980s.

To some extent these forms of "own local government" acknowledged the permanent presence of black people in urban areas. However, they were designed to reinforce the policies of segregation and economic exclusion. None had resources to make any real difference to the quality of life of their constituents.

Financial constraints

Historically, most local government revenue in urban South Africa was self-generated, mainly through property taxes and the delivery of services to residents and business. This particularly suited white municipalities which had small populations to serve and large concentrations of economic resources to tax.

Financial shortfalls were built into local government for black areas. Apartheid regulations barred most retail and industrial developments in black areas. This limited the tax base and forced residents and retailers to spend most of their money in white areas. Municipalities in black areas were therefore deprived of the means to meet the needs of local residents.

In rural areas, discrimination and segregation were equally stark. Water and electricity were supplied to white residents in rural areas at enormous cost, while scant regard was given to the needs of the rural majority. Crisis and collapse were inevitable.

Communities began to mobilise against the apartheid local government system. At its launch in 1983, the United Democratic Front gave prominent attention to the Koornhof Bills which established the Black Local Authorities.

Black Local Authorities attempted to impose rent and service charges on township residents to increase revenue. This revenue source could never have provided for meaningful delivery. It only served to anger increasingly politicised communities. The rejection of Black Local Authorities in the mid-1980s led to a popular uprising which shook the foundations of the apartheid order.

Protesting against a distorted system

As the 1984 uprising gathered momentum, civics and other community bodies started to organise. Their rallying cry was the appalling social and economic conditions in townships and bantustans. Their chief weapons were the organised boycott of rents and service charges, and consumer boycotts. For the first time people began to protest systematically against the way human settlements were spatially and economically distorted.

In the late 1980s the apartheid state attempted to prop up collapsing Black Local Authorities and calm political tensions by redirecting funds to disadvantaged areas. A system of ad-hoc intergovernmental grants was developed to channel resources to collapsing townships. Regional Services Councils and Joint Services Boards were established to channel funds to black areas. However, these interventions were "too little too late". By the late 1980s most townships and many homeland rural areas were effectively ungoverned, and it was clear that Black Local Authorities (or any similar structures) would never be viable.

The crisis opened up by the collapse of the apartheid local government system eventually led to the realisation that a new deal was needed. White municipalities, experiencing the financial impact of organised consumer, service and rent boycotts, began to enter into negotiations with township representatives. Initially these forums were little more than crisis management structures. However, these initial talks formed the basis for later local negotiations, and the system of local government we have now.

Local forums recognised that the legal constraints which separated black residents from the municipal tax base had to be addressed nationally. The popular slogan, "One City, One Tax Base", could only be realised through national legislation. Local forums collectively pushed for the establishment of a national forum, the Local Government Negotiating Forum.

An incomplete transition

The crisis in local government was a major force leading to the national reform process which began in 1990. National debate about the future of local government took place in the Local Government Negotiating Forum, alongside the national negotiating process.

The Local Government Negotiating Forum framed the Agreement on Finance and Services writing off arrears to Black Local Authorities. It also negotiated the Local Government Transition Act of 1993. The Local Government Transition Act did not provide a blueprint for a new local government system but simply sketched a process for change. The process put forward in the Local Government Transition Act was essentially a locally-negotiated transition and it has resulted in a wide diversity of forms of local government.

The Local Government Transition Act mapped out three phases of transition:

• The pre-interim phase, which prescribed the establishment of local forums to negotiate the appointment of temporary Councils, which would govern until municipal elections.
  
• The interim phase, beginning with municipal elections and lasting until a new local government system has been designed and legislated upon.
  
• The final stage, when a new local government system will be established.
  

We are now in the interim phase. The Local Government Transition Act has effectively deracialised the system of local government through the amalgamation of former racially-based structures. However, real transformation has yet to occur. The weaknesses of the Local Government Transition Act, such as its urban bias and the lack of structured support processes to enable municipalities to manage the change process, are reflected in our current municipal system. Further, the compromises reached during the negotiation of the Local Government Transition Act, such as the delimitation of wards in a manner which skewed representation and the requirement that municipal budgets must be approved by a two-thirds majority, will remain in force until the final phase of the transition.

While newly elected councils in many areas have made significant progress in addressing backlogs and extending services, they face many constraints. The huge infrastructural disparities and inequalities resulting from apartheid local government remain. The transition process has clearly shown that delivery on new municipal mandates cannot be achieved within the existing institutional framework.

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2.1. The different forms of municipality
2.2. Local government finance
2.3. Administration
2.4. Legislative complexity
2.5. Powers and functions
2.6. Global and national trends
2.7. The transition process

2.1. The different forms of municipality

Our existing interim system of local government comprises a number of different municipal institutions. Each presents specific challenges:

Metropolitan Councils with Metropolitan Local Councils

This two-tier system comprising a Metropolitan Council and Metropolitan Local Councils has been established in six areas: four in Gauteng Province (Greater Johannesburg Metropolitan Council, Vaal/Lekoa Metropolitan Council, Pretoria Metropolitan Council and Khayalami Metropolitan Council) together with the Durban Metropolitan Area and the Cape Metropolitan Area. A clear definition of metropolitan areas is required to determine whether all these areas should retain Metropolitan Councils, and if other areas in the country should be designated metropolitan areas.

There is considerable variation in the size of the current areas of jurisdiction of both Metropolitan Councils and Metropolitan Local Councils, and in the number of Metropolitan Local Councils within each metropolitan area. Metropolitan Local Councils perform different functions in different metropolitan areas, and some have assumed a wider range of service delivery functions than others. Generally, metropolitan residents have not identified with the new Metropolitan Local Council boundaries, and large Metropolitan Local Councils (sometimes with over a million residents) have struggled to facilitate community participation in municipal affairs.

The Local Government Transition Act allowed for a local negotiation process to define the allocation of powers and functions between the Metropolitan Council and Metropolitan Local Councils. This has resulted in different allocations in each area. In some cases the location of municipal functions does not enable sound management and administrative practices, and simply reflects the balance of local power relations. The current lack of clarity regarding the specific powers and duties of each tier has resulted in considerable confusion and inefficiency, and in some instances has strained relations between the Metropolitan Council and Metropolitan Local Councils.

All Metropolitan Councils are responsible for redistribution across the metropolitan area. In all cases some redistribution occurs between high-income and low income consumers of services, and through the allocation of Regional Services Council levies (employment and turnover levies) to underdeveloped parts of the metropolitan area. In some metropolitan areas a metropolitan levy is also charged on Metropolitan Local Councils, and re-allocated across the metropolitan area. These mechanisms for intra-metropolitan redistribution are not optimal, do not facilitate targeted redistribution, and have resulted in significant tensions.

The current transitional arrangements are not optimal for addressing many of the service delivery, governance and management problems within metropolitan areas. A new system of metropolitan government will need to be more clearly defined, and provide both clear guidance on the role of metropolitan government, and sufficient powers to fulfil this role.

District Councils

There are considerable variations in the size of the budgets and staffing complements of District Councils. The Local Government Transition Act did not provide for clear powers for District Councils. Their powers and functions are determined by provincial proclamations which differ from province to province. Hence the roles played by District Councils vary.

In most of the country District Councils build on the old Regional Services Councils and Joint Services Boards. In some areas District Councils are completely new structures established during the transition. Generally they are responsible for the bulk service functions of the old Regional Services Councils, and in some areas they also provide municipal services directly to the public.

District Councils have been tasked with assisting in the development of new primary structures in rural areas. Most District Councils have sufficient managerial and technical capacity to fulfil 'original" (or old Regional Service Council) functions. However, some have been slow to implement new functions (including support to rural municipalities, and direct delivery on their behalf). Others have been innovative in assisting small towns and rural areas, and in extending services to poor rural communities. Some have adopted a flexible approach to addressing priority issues that are not formally within their functional scope. Most, however, have not adopted a major role as development agents.

District Councils have a strong redistributive function. However, this redistributive function is not without problems. The large proportion of District Council levy income is collected from urban areas. These urban municipalities complain that not enough of this income is re-invested in urban infrastructure. Furthermore, wealthy metropolitan areas do not fall within District Council areas. Levy income collected in metropolitan areas is thus used exclusively for the metropolitan area. This can be perceived as unfair to non-metropolitan urban areas - it potentially reinforces the development disadvantages of struggling urban centres outside of the major cities. The role of District Councils in redistribution is complicated in some cases by powerful special interest groups, who continue to wield undue influence over the allocation of funds.

District Councils operate in very different contexts and serve areas of very different size and settlement patterns, ranging from areas of dense settlements to vast, sparsely populated regions. Generally, District Councils are significant centres of municipal capacity, and consideration should be given to building on this capacity in the design of a new local government system.

Transitional Local Councils

A Transitional Local Council model has been applied to most urban areas, ranging from major cities to small rural towns, with very different economic and social realities.

There are major variations in the capacities of municipalities serving cities and larger towns on the one hand, and small towns on the other. Municipalities in cities and larger towns face problems of poverty and uneven development, but have relatively solid administrative and financial capacity. This enables them to address their current responsibilities to a significant extent with their own resources.

Many small town municipalities, on the other hand, do not have the financial, administrative or service delivery potential to provide adequate services and governance without strong external support or rationalisation. District Councils are increasingly providing financial, accounting and other administrative services for smaller municipalities on an agency basis.

Rural Councils

There are three forms of government in rural areas:

• Transitional Representative Councils.
  
• Transitional Rural Councils.
  
• District Councils with Remaining Areas.

Transitional Representative Councils have only a representative function and no executive powers. Although they can assume executive powers as their capacity increases, in most cases few powers and duties have been devolved to Transitional Representative Councils due to their lack of capacity. Transitional Representative Councils generally do not have their own administrations, and are little more than advisory structures to District Councils. They rely on District Councils for administrative, technical and financial support.

Transitional Rural Councils have similar powers to their urban counterparts (Transitional Local Councils), although not all Transitional Rural Councils fulfil all the functions of a Transitional Local Council. Transitional Rural Councils have taxing powers but they have limited potential to generate adequate tax and service charge revenue. They rely on grants from and through the District Councils. This financial support is limited, and the basis for transfers is not clearly defined. This leads to a degree of financial uncertainty.

In some cases, the separation of rural areas from cities and towns has imposed artificial political and administrative boundaries between areas that are otherwise functionally integrated. It also creates inequity for rural residents who contribute to the town's economy but don't benefit from its resources.

In parts of the country there are no primary rural government structures, and the District Council administers what are termed Remaining Areas. In these areas voters directly elect representatives onto the District Council through proportional representation.

The limited powers and resources of rural municipalities, and their consequent inability to serve local communities, have diminished their credibility. This poses a threat to the future development of local government in these areas.

The transitional models of Rural Councils have been applied to a range of vastly different contexts, from sparsely populated commercial farmland to densely settled areas in former homelands. The very different contexts which are categorised as "rural" imply the need for a flexible system of municipal government in rural areas, and a flexible approach to providing municipal services in these areas.

While the unique challenges of each form of municipality need to be considered, a number of more general issues should also be taken into account.

2.2. Local government finance

The amalgamation of previously divided jurisdictions has massively increased the population which municipalities must serve, without a corresponding increase in the tax base. Combined with service backlogs, collapsed or deteriorating infrastructure, and deteriorating creditworthiness and borrowing capacity, municipalities are experiencing financial stress, and in some instances crisis. Municipalities are also experiencing upward pressure on salaries and the loss of experienced finance personnel. Although payment for services is improving, problems related to non-payment for services remain. Extending effective property taxation to the former township areas has also proved difficult.

Some municipalities have inadequate financial management capacity, and as a result budgeting, accounting, credit control and financial reporting systems are weak. The budget process is often not properly linked to municipal planning, and is not always open to community participation. In some cases revenue is overstated, resulting in unrealistic budgets.

These problems have put pressure on municipal cash flows and financial management. Many municipalities have responded by spending accumulated reserves, reducing capital expenditure, deferring payments to vendors, utilising bridging finance, and refinancing or extending their long-term debt. The results of national government's monitoring exercise, Project Viability, have confirmed a generally deteriorating aggregate financial position within the local sphere. However, there are great differences between municipalities with respect to their financial position, and many municipalities are financially stable and healthy despite these difficulties.

2.3. Administration

Most municipalities have undergone some administrative changes as a result of the amalgamation process. However, many administrations are still organised in much the same way as before, and most have not made significant progress with respect to transforming service delivery systems. Many municipal administrations are still characterised by hierarchical line departments, poor coordination between line departments, and authoritarian management practices. Front-line workers remain de-skilled and disempowered, and women and black people are not adequately represented in management echelons. In many cases the lack of performance management systems and poor internal communication contribute to inefficiency in service delivery.

The changed mandate of local government (with additional developmental functions) requires new capacities, attitudes and approaches, which are only beginning to emerge. Relations between municipal Councils and the administration, between management and the workforce, and between the municipality and service-users, need to be improved.

Some progress has already been made with respect to improving the training and labour relations systems, which have historically been poorly organised and ineffective. Agreement has been reached on a process to restructure the training system, and the South African Local Government Bargaining Council has recently been established.

Significant support and investment are required to build administrative capacity for the new local government system.

2.4. Legislative complexity

There have been changes in the local government system since 1993. However, many of the laws and regulations which supported the old system remain in effect (see Annexure A). In one way or another, these continue to impact on the operation of new municipalities. These inherited pieces of legislation are often applied differently in different parts of the country, resulting in considerable confusion and uncertainty. The current legislative complexities and legal vacuums have to be addressed. The body of inherited law must be rationalised to support the new vision and role identified for local government.

2.5. Powers and functions

Local government has a range of powers and functions at its disposal. Definitive municipal powers are defined in the 1996 Constitution, in Part B of Schedules 4 and 5:

The powers listed in Schedule 4, over which national and provincial government have concurrent legislative competence, include:

air pollution; building regulations; child care facilities; electricity and gas reticulation; fire fighting services; local tourism; municipal airports; municipal planning; municipal health services; municipal public transport; municipal public works (only in respect of the needs of municipalities in the discharge of their responsibilities to administer functions specifically assigned to them under the Constitution or any other law); pontoons, ferries, jetties, piers and harbours (excluding the regulation of international and national shipping and matters related thereto); stormwater management systems in built-up areas; trading regulations; water and sanitation services (limited to potable (drinkable) water supply systems and domestic waste water and sewage disposal systems).

National and provincial governments have the right to legislate on these powers and functions, and the executive authority to ensure that municipalities perform these functions adequately.

The powers listed in Schedule 5, over which provincial government has exclusive legislative competence, include:

beaches and amusement facilities; billboards and the display of advertisements in public places; cemeteries, funeral parlours and crematoria; cleansing; control of public nuisances; control of undertakings that sell liquor to the public; facilities for the accommodation, care and burial of animals; fencing and fences; licensing of dogs; licensing and control of undertakings that sell food to the public; local amenities; local sports facilities; markets; municipal abattoirs; municipal parks and recreation; municipal roads; noise pollution; pounds; public places; refuse removal; refuse dumps and solid waste disposal; street trading; street lighting and traffic and parking.

Other local government powers are defined in national and provincial legislation. For example, the Local Government Transition Act (Second Amendment Act) gives local government powers for integrated development planning.

In addition, municipalities have potential powers and functions that may be devolved or delegated to them from provincial and national government. These national and provincial powers and functions are listed in Part A of Schedules 4 and 5 of the 1996 Constitution. The Constitution provides for the delegation of powers and functions to local government by agreement, if municipalities have the necessary capacity and are regarded as the most effective site from which these powers may be exercised. Again local government's exercise of these powers and functions is subject to national and provincial oversight.

Local government's core function needs to be understood as part of the functioning of the state and its three sphere government system as a whole. The constitutional definition of local government's powers and functions in relation to provincial and national government, is, however, ambiguous in some respects, and requires further clarification. This situation is further complicated by the fact that most powers and functions have several components, not all of which are best performed by the same sphere of government. The Constitution makes these distinctions to some extent (for example, between trade and trading regulations) but grey areas remain.

2.6. Global and national trends

No municipality can ignore the economic changes taking place in its locality, in the surrounding region, in the nation, and globally. The rise or decline of industries can have a marked impact on local income, employment and tax revenue.

Globalisation, or the internationalisation of capital, production, services and culture, has had, and will continue to have a major impact, in particular on metropolitan areas. The logic of transnational corporations, the fact that economic transactions and the integration of systems of production occur on a world-wide basis, and the rapid development of information technologies, have resulted in the emergence of the so-called "global economy". In this context large cities become the nodes or points of contact which connect economies across the globe.

The Growth, Employment and Redistribution (Gear) strategy places greater emphasis on an export-oriented economy, and will lead to increased international openness and competition. The ultimate aim is to achieve internationally competitive industries and enhance economic growth and well-being. In the immediate term, municipalities will need to manage the consequences of globalisation - such as the restructuring and relocation of industries.

Local government has an interest in attracting investment based on promoting the comparative advantages of the area for competitive industries, as well as supporting the growth of local enterprises. It will become increasingly important for municipalities to find the right balance between competition and co-operation among themselves. While some competition will improve both efficiency and innovation, co-operation between South African municipalities is necessary to enhance the performance of the national economy as a whole, and to avoid damaging forms of competition between municipalities.

2.7. The transition process

Municipalities are all experiencing problems arising from the transition process. Costly and complex administrative reorganisation has tended to focus municipalities' capacity inwards, rather than towards their constituencies and delivery. Prolonged uncertainty about powers, functions, areas of jurisdiction and a host of other matters affecting local government have added to the problem. At the same time, municipalities have faced increasing demands and expectations on delivery, often without an increase in the resources to deal with these demands, or even with shrinking subsidies. They have also faced the difficult task of realigning their operations with a range of sectoral policies and programmes. Overall there has been a lack of information and capacity.

While grappling with inherited inefficiencies and inequities, municipalities have also had to put in place a system of democratic and equitable governance, often in the face of resistance from a range of local players who benefited under apartheid.

It is essential for the successful implementation of a new system of local government that programmatic support is provided to municipalities to assist them during the next phase of the transition process.

The transition process has resulted in a local government system consisting of 843 municipalities and over 11 000 democratically elected councillors. Approximately one third of municipalities are facing serious financial difficulties or administrative problems. Serious consideration needs to be given to reducing the number of municipalities and councillors to enhance the viability of the local sphere.

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3.1. Introduction
3.2. Settlement types
3.3. The implications of current settlement patterns

3.1. Introduction

Given the diversity of settlements across the country, an understanding of settlement types is critical for policy-makers seeking to create appropriate municipal institutions.

• Settlement dynamics have a major influence on the resource demands made on local government, particularly demands for access to basic services and infrastructure. Factors such as the population density and economic base of a settlement influence proximity to bulk services, the cost of installing services and levels of affordability for households. Settlement conditions therefore need to be taken into account when defining approaches to service delivery and appropriate municipal institutional arrangements.
  
• Changes in population distribution affect the size of functional boundaries*. Boundary demarcation needs to take into account, and anticipate, the population distribution and concentration which is to be served by any municipality.

3.2. Settlement types

There is no simple categorisation of settlement types, and the definition of "urban" and "rural" is hotly debated. However, the following loose categorisation of settlement types is intended to facilitate an understanding of the diversity of settlements, and also to facilitate discussions on appropriate municipal institutions for the different settlement types:

URBAN CORE refers to the formal city and town, including the former white municipal and former townships areas. A key characteristic of these areas is their high population density, with generally over 10 dwelling units per hectare. These areas are characterised by high levels of economic activity, and consequently higher land values.

URBAN FRINGE refers to various settlement conditions which exist within the boundaries of municipalities, but outside the urban core. This includes low-income settlements on the outer edges of towns and cities, many of which display middle order densities and large service backlogs. However, it also includes high-income low-density settlements, particularly on the peripheries of metropolitan areas.

SMALL TOWNS, most of which have intermediate density levels and the characteristic apartheid urban form - a former white area with intermediate to high service levels, and former black areas with more limited access to services. Small towns vary greatly, but most are economically and socially linked to surrounding rural hinterlands.

DENSE RURAL SETTLEMENTS: There are two predominant kinds of dense rural settlement, namely:

"BETTERMENT" SETTLEMENTS, which are common in the former homeland areas. These are dense, planned settlements, with populations of over 5 000 people.

INFORMAL SETTLEMENTS, which are unplanned and largely unserviced, with populations of over 5000 people. Some are close to urban areas, and others are located in rural areas with a minimal local economic base. Some intensive commercial farming settlements also fall within this category.

VILLAGES, or smaller rural settlements with populations of more than 500, but less than 5 000 people. These are often unplanned traditional settlements or resettlement areas.

AGRI-VILLAGES are planned, dense settlements in rural areas, which service the surrounding farms.

DISPERSED OR SCATTERED SETTLEMENTS, which are mostly unplanned homestead settlements with a population of less than 500 people. Extensive settlements in commercial farming areas, some located on communal land and others on privately owned land, also fall within this category.

Each category is complicated by variations in features such as land tenure systems.

Each of the settlement types described above contains a diversity of communities and households and individuals whose relationships to their living space are shaped by the activities, interactions, needs and opportunities that colour their daily lives. These "Communities" and "households" are not homogeneous categories in which everyone is the same. Different people have different starting points in life - determined by such factors as gender, class, and race - and different opportunities to access resources and influence decision-making. Within communities and households, power dynamics can develop which see some people gain access to resources and power, and others marginalised or excluded.

Local government is uniquely placed to analyse and understand power dynamics within a community, and ensure that those who tend to be excluded and marginalised can become active and equal participants in community processes and the transformation of the settlements where they live.

3.3. The implications of current settlement patterns

Over half of the nearly 40 million people who live in South Africa are currently urbanised. Increased urbanisation, from natural urban population growth and migration from rural to urban areas, is expected to continue and result in dramatic increases in the proportion of urbanised citizens over the next two decades. Metropolitan areas and secondary cities are expected to absorb most of this growth. The population of rural areas is not expected to grow substantially - either as a proportion of the total population, or in absolute terms (in total).

The end of apartheid and the removal of legal restrictions to movement (influx control and group areas), demarcation of new boundaries, and migration trends within the Southern African sub-region have not (yet) meant fundamental change in national population distribution, urbanisation and migration. However, research reveals that profound changes may be under way in migration trends and settlement patterns, which will have a major impact on local government in the years to come.

Apartheid influenced South African settlement patterns in profoundly inequitable ways, and imposed enormous costs on mobility between rural and urban areas, and within urban areas. Municipalities can play a key role in transforming settlement types, and in addressing some of the existing distortions.

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A new local government system needs to build on the strengths of the current system. Equally it needs to address its weaknesses, and build the capacity of municipalities to address the considerable challenges they face.

4.1. Challenges facing South African municipalities

Municipalities the world over face the challenge of managing viable and environmentally sustainable urban and rural systems. South African municipalities face additional challenges, including the following:

Skewed settlement patterns, which are functionally inefficient and costly.
Extreme concentrations of taxable economic resources in formerly white areas, demanding redistribution between and within local areas.
Huge backlogs in service infrastructure in historically underdeveloped areas, requiring municipal expenditure far in excess of the revenue currently available within the local government system.
Creating viable municipal institutions for dense rural settlements close to the borders of former homeland areas, which have large populations with minimal access to services, and little or no economic base.
Great spatial separations and disparities between towns and townships and urban sprawl, which increase service provision and transport costs enormously. Most urban areas are racially fragmented, with discontinuous land use* and settlement patterns. Municipalities in urban areas will need to develop strategies for spatial integration*, while managing the continuing consequences of rapid urbanisation and service backlogs.
Creating municipal institutions which recognise the linkages* between urban and rural settlements. There is a wide variety of urban settlements, ranging from those which play the roles of local or regional service centres (supplying services to rural areas and other towns), to functionally specialised towns (such as mining towns) and administrative centres (common in former homeland areas). Importantly, almost all towns are functionally linked to rural areas, relying on their hinterlands* for productive economic activity and providing critical centres for the delivery of social services.
Entrenched modes of decision-making, administration and delivery inherited from municipalities geared for the implementation of urban and rural apartheid.
Inability to leverage private sector resources for development due to a breakdown in the relationship between capital markets and municipalities, the lack of a municipal bond market and the poor creditworthiness of many municipalities.
Substantial variations in capacity, with some municipalities having little or no pre-existing institutional foundations to build on.
The need to rebuild relations between municipalities and the local communities they serve. Municipalities should be particularly sensitive to the needs of groups within the community who tend to be marginalised, and responsive and accessible to people with a disability.

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Local government has been given a new constitutional mandate to create and sustain humane, equitable and viable human settlements. It is doubtful whether local government - as presently designed - is adequately equipped to fulfil this developmental mandate. Local government has been democratised, but the local government system is still structured to meet the demands of the previous era. A fundamental transformation is required.

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Contents | General | Section A | Section B | Section C | Section D | Section E | Section F | Section G | Section H | Annexure A | Annexure B | Annexure C | Annexure D | Glossary | Obituary | The White paper process

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