Magister Artium (Development Studies) - MA(DVS) / Local governments worldwide are invariably faced with challenges of human capacity constraints, corruption, lack of operating transparency and accountability, dysfunctional ward committees, poor public participation, non-compliance with legislation and by-laws, poor prioritisation of community needs, unaligned budget processes, unauthorised and wasteful expenditure, tensions between politicians and administrators, as well as weak financial viability. A strong legal framework, clearly defining authority and accountability, backed by relevant skills development training, are necessary foundations for service delivery; however, without the appropriate training, staff performance could remain inadequate. Various countries have reached varying levels of local government effectiveness; however, all too often municipalities do not have the adequate skills required, to deliver the services needed, to ensure community development.

This dissertation assesses the importance of a specific debt instrument, the Certifi- cate of Obligation in the state of Texas. It conceptualizes the Certificate of Obligation as a type of contractual debt that enables local governments to finance their capital projects. This dissertation is guided by three research questions: (1) What are the various types of debt instruments employed by local governments and what are their relative advantages? (2) How prevalent is the use of a specific debt instrument such as Certificates of Obligation? And why would some local governments prefer to issue them while others do not? (3) To what extent does the local institutional environment, e.g., the executive authority of city managers in the council-manager form of government, affect debt financing behaviors of local governments? To examine the first research question, we created a typology to represent four ideal types of borrowing methods: (1) Contractual Debt, (2) Voter Approval/Special Tax Debt, (3) Guaranteed, and (4) Non-Guaranteed Debts. The typology examines whether or not the state mandates the referendum requirement for the use of each of these debt instruments, and at the same time determines whether each debt instrument is secured by multiple or single revenue sources. Using data we collected among municipal governments in Texas, we conducted two empirical analyses. The first analysis tests the hypothesis that Certificates of Obligation have higher borrowing costs compared to GO bonds, since a GO bond is often issued under the pledge of the bond issuers’ full-faith credit and taxing authority. We employed a two-stage least square analysis to test the general proposition in the state of Texas. Based on 741 Certificates of Obligation and GO bonds issued between 2008 and 2011, our analyses show that Certificates of Obligation are likely to incur True Interest Costs (TIC) similar to those of GO bonds. The second analysis explores factors explaining the use of Certificates of Obligation in 225 Texas charter cities. Based on Heckman’s two-stage, we found that a local government’s decision to issue Certificates of Obligation to be partly explained by the characteristics of local population, i.e., median household income, population growth, and the percentage of senior citizens living in the jurisdiction. In the case of GO bonds, we found that population size, property tax rate, debt burden, and the percentage of population with at least a college education, to be an important determinant of GO bonds. The volume of GO issuance by local governments was also related to the level of regional competition, i.e., government density. Additionally, we found that local political institutions matter and that they affect debt financing behaviors of local governments.

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Published Article / Despite the introduction of various legislative measures to improve the performance of local government in terms of the mandate to be an autonomous sphere of government, service delivery in South Africa remains questionable and local government in a quandary. Performance in this context is influenced by globalization, technological development and challenges such as the world-wide financial crisis, enforcement of debt collection policies, decaying infrastructure and an unresponsive political and administrative environment. Strategies are recommended to ensure that local government can move beyond this point to excellent service delivery.

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Please read the abstract in the section 00front of this document / Thesis (DPhil)--University of Pretoria, 2008. / School of Public Management and Administration (SPMA) / unrestricted

published_or_final_version / abstract / Politics and Public Administration / Doctoral / Doctor of Philosophy

D.Litt. et. Phil. (Public Management and Governance) / This study focused on a literary analysis to determine critical future considerations required to position the South African Local Government National Capacity Building Framework (NCBF) of 2011. The study addressed, inter alia, the research question: What is the nature and scope of the NCBF in local government and which priority interventions could be taken at an institutional level to promote the objectives of local government as constructed within the Constitution? Although the former Department of Cooperative Governance (DCoG) (currently the Department of Cooperative Governance and Traditional Affairs (CoGTA) and its key stakeholders compiled the NCBF by 2004 and reviewed it in 2008, no study has yet been made of the effectiveness of the NCBF to coordinate support, capacity building and training initiatives aimed at local government to ensure that the necessary impact is achieved. Much attention has been given to individual capacity building in local government however, their inter-relatedness to institutional and environmental capacity is not sufficiently addressed to improve each municipality’s capacity. It is widely acknowledged that the ‘one-size-fits-all’ approach adopted by the national and provincial government to implement legislation in terms of the fiscal, functional and planning arrangements for local government, has not assisted municipalities with varying legacies and backgrounds to deliver uniformly on their mandates and obligation. This ‘one-size-fits-all’ approach does not take into consideration the impact of major integration challenges compounded by spatial differences between municipalities in terms of capacity to raise revenue and to deliver services. The lack of capacity in local government is a recurring theme as is the lack of coordination and the impact on the current initiatives. There is also not yet at least one set of capacity indicators against which to measure local government’s capacity. A qualitative research methodology was followed in general and a conceptual and theoretical analysis in particular. The thesis contributed to understanding of capacity building and related concepts, theories, approaches and phenomena that influence the capacity of local government to meet its objectives. The study included a detailed exploration of skills development within the realm of capacity building. It also contributed to a specific level of understanding of the variables influencing the institutional, regulatory and policy framework of the South African government system and legislation and related frameworks relevant to local government, support, capacity building and training. The study provided an integration of the determinants influencing a differentiated approach to support, capacity building and training in the local government sector and developed a model to measure support, capacity building and training at local government level, by developing measureable capacity indicators to optimally implement the NCBF of 2011 to 2016 in the long term.