Implications of municipal service consumer debts on service delivery in rural municipalities: A case study of municipalities in Vhembe District, Limpopo Province South Africa

Abstract

Rural municipalities in South Africa have been grappling with delivering quality services to communities due to shrinking revenue bases over the last ten years. The study explored the relationship between consumer debt recovery and municipal service delivery in three selected municipalities in Vhembe District, Limpopo Province. The implications of revenue collection in rural areas was examined through the computation of the Coefficient Effect Size Model which aimed at proving whether rurality had an effect on payment of rates and taxes. A combination of Goal Achievement Matrix and Correlation Quotient analysis were used to explain the linkage between service delivery and the resource base of rural municipalities. The Rurality Quotient and the Coefficient Effect Size were both developed in the study to link the rurality nature of municipalities to the viability of rural municipalities to provide services. The review of literature incorporated an appraisal of municipal policy documents such as the Integrated Development Plans, Spatial Development Plans, Annual Budget Reports and Service Delivery Budget Implementation Plan. The study findings revealed that consumer debts resulted in rural municipalities failing to generate revenue thus affecting internal revenue pockets. Furthermore it was discovered that rural municipalities were recording a negative effect size as well as a negative Rurality Quotient thus proving that rurality directly affected the level of payment of services. The projection showed a significant probability of a steady increase in consumer debts in rural municipalities in the next ten years if the issues and challenges are not addressed effectively. Therefore a Rural Consumer Debt Recovery Framework tool was proposed to provide clear guidelines on how rural municipalities can deal with non-payment of rates and taxes. In addition to this a review and update of all revenue enhancement policies such as the Credit Control and Debt Collection Policy to match the changes occurring over time in rural municipalities is necessary to change the current status of revenue collection in municipalities.