Enhancing provincial government’s revenue generation for effective service delivery

Abstract

Background: The Constitution of South Africa assigns the duty of providing basic social services and administering social security grants and welfare schemes to the various provinces that fund their expenditure from the allocation received from the national government and provincially raised revenue. The provincial equitable share (PES) formula is employed to allocate revenue to provinces based on the size of the province’s population. Provincial governments rely heavily on the budget transfers from the national treasury, as the revenue that is raised at the provincial level is inadequate to fund expenditure but the revenue received through the PES has been declining and exerting additional strain on service delivery in the Eastern Cape Province.

Aim: This article aimed to analyse provincial own receipts (revenue) and the factors that affect revenue generation in the Eastern Cape province of South Africa. The article further aimed to utilise the results to generate recommendations as to how the province can enhance provincial government revenue.

Setting: Eastern Cape province, South Africa.

Methods: This research utilised quantitative, descriptive statistics.

Results: The observations indicated that improved economic growth, household incomes and employment opportunities will not necessarily lead to improved revenue generation in the province. Authorities cannot rely on improving economic variables alone to increase such revenue and sound administration is required to enhance revenue generation in the Eastern Cape Province.

Conclusion: The Eastern Cape Province needs to enhance the efficiency of the revenue collection strategies whilst simultaneously broadening the revenue base.