Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: Local authorities, being at the coalface of government service delivery, have a statutory duty to deliver a wide range of services to their communities. Having limited resources themselves, and due to the poverty in their communities, municipalities aim to maximise the efficiency of their operations in order to be able to deliver appropriate quality services at the lowest possible cost. Municipalities are subject to a variety oflaws, regulations and policies which regulate the way in which they go about their business. In the context of supply chain management, the recently promulgated Municipal Finance Management Act and its associated Regulations and Guidelines is the most important of these. Supply chain management, defined by the MFMA to include procurement, disposal of assets and contract management, is an important issue in Lukhanji Municipality due to the amounts of money allocated to capital projects as well as to operations. Municipalities, as organs of State, are also required to implement policies which are aligned with other provincial and national polices and, in the context of supply chain management, which do not prejudice national economic policy. Municipalities, in addition to their service delivery role, have a mandate, conferred by the Constitution of the Republic of South Africa, to play a developmental role in their communities. They are required, in their procurement of goods and services, to apply preferential procurement processes in order to promote the use of: enterprises owned and managed by previously disadvantaged individuals; Small- Medium- and Micro-enterprises (SMMEs); local resources; and other marginalised individuals and groups. Municipalities are thus required to comply with statutory requirements and to strive for the achievement of social and economic objectives. The purpose of this study is to: describe all the current legislation, regulations and policies affecting municipal supply chain management; examine the conflicts arising from the different perspectives of the various statutory and policy requirements; describe the factors which constrain the municipality in its efforts to maximise the benefits arising from supply chain management activities; develop objectives for the supply chain management policy m terms of statutory compliance, social aspects and economic goals and which are not in conflict with each other; analyse the draft Supply Chain Management policy developed for Lukhanji Municipality to determine its efficacy in supporting the objectives developed; make recommendations regarding the final Supply Chain Management policy for Lukhanji; and propose further research arising out of the findings of this study. The main findings of the study are: some of the requirements of legislation and applicable policies are mutually exclusive and some compromises have to be made; the Supply Chain Management policy can be used as a tool to achieve socio-economic objectives while still complying with the statutory requirements; in particular, the Supply Chain Management policy can be used for the promotion of SMMEs, black economic empowerment, local economic development and job creation; a comprehensive set of socio-economic objectives and statutory requirements have been developed for Lukhanji Municipality's Supply Chain Management policy; the current high levels of provincial and national government spending on infrastructure development represent an opportunity for local economic development; the promotion of local SMMEs is an important element in increasing the multiplier effect, on the local economy, of the economic injection of the extensive infrastructure development currently in progress in the Lukhanji municipal area; the potential benefits are reduced by the capacity constraints and scarcity of resources within local government; and the draft policy prepared for Lukhanji will ensure compliance with the statutory requirements for supply chain management but needs to be amended to increase its efficacy in achieving Council's socio-economic objectives. The study highlighted several deficiencies in current knowledge especially in industries other than the construction industry. Research to test the hypothesis that the principles applicable to the construction industry can be applied to other industries is proposed. More research is also recommended to be done on establishing the link between spending on infrastructure and local economic benefits and how to maximise the benefits especially to increase local economic development, job creation and poverty. / AFRIKAANSE OPSOMMING: Plaaslike owerhede staan op die voorpunt van die regenng se dienslewering aan die gemeenskap. Gekonfronteer deur hul eie gebrek aan hulpbronne, en die armoede van hul gemeenskappe word munisipaliteite genoodsaak om dienste van gepaste gehalte teen minimum koste te lewer deur om hul doeltreffendheid te maximiseer. Munisipaliteite is onderhewig aan 'n magdom wette, regulasies en beleide wat op hulle aktiwiteite van toepassing is. In die geval van voorsieningskettingbestuur is die Munisipale Finansiëlebestuurswet en gepaardgaande Regulasies en Riglyne die belangrikste wetstuk. Voorsieningsketting aktiwiteite, soos deur die Munisipale Finansiëlebestuurswet gedefineer om aankope, verkoop van bates en kontrakbestuur in te sluit, word as belangrik geag as gevolg van die hoeveelhede geld wat betrokke is. Die bedrae sluit in die allokasies aan kapitaalprojekte asook die lopende begroting. Munisipaliteite, in hul hoedanighede as Staatsinstansies, word verplig om alleenlik beleide wat provinsiale en nasionale beleid ondersteun toe te pas en, verder, om te verhoed dat hul beleide met nasionale ekonomiesebeleid teenstrydig is. Afgesien van hul diensleweringsrol word munisipaliteite, deur die Grondwet van die Republiek van Suid Afrika, ook belas met die plig om hul gemeenskappe te ontwikkel. Deur middel van hul aankope van goedere en dienste word munisipaliteite gelas om voorkeur aan die volgende te gee: Besighede wat deur voorheen benadeelde individieë besit en bestuur word; Klein- Middelmatige- en Micro-sakeondernemings; Plaaslike hulpbronne; en ander benadeelde individieë en groepe. Opsommend, moet munisipaliteite aan alle wetgewing voldoen terwyl hulle ook streef om sosiale en ekonomiese doelwitte te bereik. Die doel van hierdie studie is om: al die huidige wetgewing, regulasies en beleid wat van toepassing is te beskryf; die konflikte voortspruitend uit die verskillende oogpunte van die wetgewing en beleidstukke te ondersoek; die faktore wat die munisipaliteit strem in sy strewe om sy doelwitte te bereik; die formulering van die doelwitte van sy voorsieningskettingbestuursbeleid ten opsigte van die wetlike vereistes asook die sosiale en ekonomiese doele wat nie teenstrydig met mekaar mag wees nie; die ontleding van Lukhanji se voorgestelde voorsieningskettingbestuursbeleid om sy doeltreffendheid ten opsigte van die ondersteuning van sy doelwitte te bepaal; die formuleering van voorstelle rakende die finale beleid; en verdere navorsing aan te beveel. Die belangrikste bevindinge is: van die wetgewing en beleide wat van toepassing is het uiteenlopende vereistes wat sekere kompromieë noodsaak; die Raad se voorsieningskettingbestuursbeleid kan gebruik word om sy sosiale en ekonomiese doelwitte te bereik sonder om enige wetgewing te oortree; in besonder, kan die beleid die gebruik van Klein- Middelmatige- en Mikrosakeondernemings, swart bemagtiging, plaaslike ekonomiese ontwikkeling en werkskepping bevorder; 'n volledige stel doelwitte vir voorsienings ketting bestuur is geformuleer; die plaaslike ekonomie kan voordeel trek uit die omvattende infrastruktuur ontwikkeling wat huidiglik in Lukhanji deur provinsiale en sentrale regering befonds word; die betrokkenheid van Klein- Middelmatige- en Micro-sakeondernemings kan die positiewe effek, op die plaaslike ekonomie, van bogenoemde ekonomiese inspuiting vermenigvuldig; die omvang van die voordele word egter deur die gebreke aan menslike en finansiele hulpbronne beperk; en Lukhanji se voorgestelde beleid sal verseker dat die munisipaliteit aan die wetlike vereistes voldoen maar sal moet aangepas word om sy sosiale en ekonomiese doelwitte te bereik. Die studie het uitgewys dat sekere kennis van voorsieningskettingbestuur in gebreke bly, veral in nywerhede anders as die konstruksie bedryf. Navorsing om die hipotese, dat die beginsels van die konstruksie bedryf ook in ander nywerhede toegepas kan word, te toets word voorgestel. Verder navorsing om die verwantskap tussen besteding aan infrastruktuur en plaaslike ekonomiese ontwikkeling beter te verstaan word ook aanbeveel. Die gebruik van staatsbesteding om plaaslike ekonomiese ontwikkeling en werkskepping te bevorder om armoede te bekamp is van kardinale belang.

Thesis (MBA) -- Stellenbosch University, 2007. / ENGLISH ABSTRACT: The study was motivated by the widely reported problem of poor financial management within South African local government and, more specifically, the deteriorating status of revenue management, especially in medium to smaller municipalities. The reasons for the alleged poor financial management are complex and involve issues of management capacity, inappropriate systems, and socio-economic circumstances. It is obvious that a holistic approach will be required to address such a multi-ciimensional problem. This research proposes to suggest solutions to the revenue management problems facing South African municipalities. If this issue is not resolved urgently, local government will impede service delivery rather than improve it. Service delivery is key to the integration of South Africa's first economy into a second economy. The specific objectives of the research are; firstly, to develop a revenue management value chain model specific for municipalities; and, secondly, to conduct an analysis of the Lukhanji Local Municipality's financial status against the value chain model. To attain the objectives of this study existing literature and the scope of the problem must first be examined and understood. It is evident that the prevailing revenue management problem experienced, lie with the local government themselves in terms of their inadequate financial management. These problems have placed Significant pressure on municipalities' cash flows and eroded their financial resources. In turn, this has resulted in questionable sustainability and financial via bility, as the problematic cash position of municipalities has impacted negatively on their capital and maintenance expenditure. One of the greatest challenges facing local government is the collection of revenue raised for services rendered to various consumers. Of the various actions taken by government to address the current crisis situation in municipalities in the short to medium term, national grants to sponsor capital projects and services have been key in Stellenbosch University http://scholar.sun.ac.za iv ensuring that the decrease in municipal expenditure has not been greater, preventing the potentially disastrous consequences. The Municipal Finance Management Act, together with the Municipal Structures Act, Municipal Systems Act; and also the Constitution provide a well -defined financial framework within which local government can function. The research also reviewed all four main revenue sources of local government, namely own revenue {utility fees and property tax}; subsidies through intergovernmental transfers; loans; and private-sector equity. Despite the improvement in intergovernmental transfers, it is important that all municipalities maximise their own revenue, while considering those that cannot afford basic services. The research proposes the following revenue management value chain model, specifically for South African municipalities: Revenue Planning Indigent Management Tanff Setling ~ Metering Billing Customer Database Management Revenue Coliection I) Credit Control Loss Management In the analYSis of the Lukhanji Local Municipality's financial status against the value chain model, it became evident that problems existed in all elements of the value chain. General financial and viability assessments supported the above finding and indicated financial difficulties and serious cash-flow problems. The research present several recommendations regarding the improvement of poor financial management in South African municipalities and the Lukhanji Local Municipality. However, in brief, urgent attention is required in terms of the Lukhanji Local Municipality's cash-flow in the short term, while a performance-driven culture needs to be developed in the long term. Lastly, local government in general, and the Lukhanji Local Municipality specifically, will succeed in improving their revenue management if they harness the collective will and skills of all the stakeholders involved in the provision of services. / AFRIKAANSE OPSOMMING: Die studie spruit voort uit die negatiewe publisiteit oor die probleem van swak finansi~le bestuur in plaaslike regering en, meer spesifiek, die verslegtende stand van inkomstebestuur, veral in mid del slag- tot klein munisipaliteite. Die redes is ingewikkeld en behels probleme met bestuursvermo~, onvanpaste stelsels, 'n kultuur van nie-hetaling, en sosio-ekonomiese omstandighede. 'n Holistiese benadering is ooglopend nadig om die vee/dimensionele probleem op te los. Die doel van die navorsing is om by te dra tot die vind van oplossings vi r die inkomstebestuursprobleme wat munisipaliteite in die gesig staar. Indien die situasie nie dringend omgekeer word nie, bestaan die gevaar dat ons munisipaliteite in bankrotskap gebring kan word , wat beteken dat hulle nie hul grondwetlike verpligting sal kan nakom nie en dat hulle dienslewering sal belemmer en dit verbeter nie. Goeie dienslewering is die sleutel vir die integrasie van Suid Afrika se eerste ekonomie met die tweede ekonomie. Die doelwitte van die navorsing is; eerstens, om 'n spesifieke inkomstebestuurs-waardekettingmodel vir munisipaliteite te ontwikkel; en meedens, om Lukhanji Plaaslike Munisipaliteit se finansiele status teen die model te meet. Om die doelwitte te bereik moet die probleem vestaan word deur bestaande literatuur te bestudeer . Oit is duidelik dat die heersende inkomstebestuurs probleme h§ by die plaaslike regering in terme van hul onvoldoende finansiele bestuur. Die probleme het geweldige druk op munisipaliteite se kontantvloei gesit en sodoende hul hulpbronne gedreineer. Oit het 'n vraagteken geplaas op die volhoubaarheid en finansiele lewensvatbaarheid van munisipaliteite as gevolg van die kontant probleme se negatiewe impak op die kapitale en instandhouding bestedings. Een van die grootste uitdagings waarvoor plaaslike regering te staan kom, is die invordering van inkomste wat gehef word vir dienste wat aan verskeie verbruikers gelewer word . As dit nie vir die Stellenbosch University http://scholar.sun.ac.za vii nation ale tussenregeringsoordragte, vir beide dienslewering en kapitaal projekte was nie, sou munisipaliteite met baie erger probleme gesit het. Die Wet op die Bestuur van Munisipale Finansies, tesame met die Wet op Munisipale Strukture; die Wet op Munisipale Stelsels; asook die Grondwet verskaf 'n goed omskrewe finansif!le raamwerk binne plaaslike regering. Die studie behandel die vier vernaamste inkomstebronne van plaaslike regering, wat eie inkomste (utiliteitsgelde en eiendomsbelasting), subsidies deur tussenregeringsoordragte, lenings en privaatsektor-ekwiteit insluit. Ten spyte van die verbetering van tussenregeringsoordragte vir sommige jurisdiksies, is dit belangrik dat aile munisipaliteite huJ eie inkomste maksimeer, met die fokus op diegene wat wei basiese dienste kan bekostig. Die navorsing doen die volgende inkomstebestuurs-waardekettingmodel spesifiek vir munisipaliteite aan die hand: Inkomstebeplanning Bestuur van hulpbehoe- Tarief· wendes vasstelling C. Metenesing Fakturering Klante- Databasisbestuur Inkomsteinvordering ~ Kredietbeheer Verliesbestuur By die ontleding van die Lukhanji Plaaslike Munisipaliteit se finansiele status teenoor die waardekettingmodel het dit duidel ik geblyk dat probleme in al die elemente van die waardeketting bestaan. Die algemene finansiele ontleding en finansiele lewensvatbaarheidsmodel ondersteun die bostaande bevindinge en toon dat die Munisipaliteit in ernstige finansiele moeilikheid verkeer. Die navorsing sluit verskeie onderling velWante aanbevelings oor die verbetering van swak finansieJe bestuur in Suid Afrikaanse munisipaliteite en die Lukhanji PlaasJike Munisipaliteit in. Die Munisipaliteit se kontantvloei het veral dringende aandag nodig in die korttermyn, terwyl die Munisipaliteit 'n kultuur van prestasiebestuur in the langtermyn moet ontwikkel. Plaaslike regering oor die algemeen en die Lukhanji Plaaslike Munisipaliteit in die besonder sal net in hul inkomstebestuur slaag as hulle die gesamentlike wil en vermof!ns van al die belanghebbendes wat by die verskaffing van dienste betrokke is, kan aanwend.