Local municipality productive efficiency and its determinants in South Africa

Figures & data

Table 1: Classification of municipalities in South Africa

Category	Description
A	Metropolitan municipalities: large urban complexes with populations over one million and accounting for 56% of all municipal expenditure in the country
B1	Local municipalities with large budgets and containing secondary cities
B2	Local municipalities with a large town as a core
B3	Local municipalities with small towns, with relatively small population and a significant proportion of urban population but with no large town as a core
B4	Local municipalities that are mainly rural with communal tenure and with, at most, one or two small towns in their area
C1	District municipalities that are not water service authorities
C2	District municipalities that are water service authorities

Source: Adapted from CoGTA (2009).

Table 2: Summary statistics of municipal input and outputs for 2007/08, by municipal category

pdgcategory	Variable	Number of observations	Mean	Standard deviation	Minimum	Maximum
B1	TotalOpEx	19	799 368	462 680	243 962	1 851 599
	Totalpop	21	392 058	188 346	124 351	752 906
	Cuwater	21	83 419	51 817	19 238	191 047
	Cuelec	21	76 019	60 263	21 550	235 491
	Cusan	21	72 287	44 291	24 800	149 861
	Cuwaste	21	64 328	42 602	24 800	182 686
B2	TotalOpEx	24	188 797	124 634	3 291	523 934
	Totalpop	29	140 902	94 133	32 840	444 830
	Cuwater	29	19 422	13 301	0	48 086
	Cuelec	29	22 570	11 394	8 544	53 004
	Cusan	29	17 887	13 763	0	53 609
	Cuwaste	29	20 435	11 841	0	48 086
B3	TotalOpEx	80	68 394	66 923	–16 481	435 155
	Totalpop	111	55 480	53 162	5 156	385 413
	Cuwater	111	10 462	11 415	0	95 281
	Cuelec	111	10 013	9 504	776	71 663
	Cusan	111	9 916	11 104	0	95 281
	Cuwaste	111	9 171	6 742	478	38 752
B4	TotalOpEx	49	52 962	55 830	1 867	300 489
	Totalpop	70	185 421	105 679	39 401	602 819
	Cuwater	69	14 843	28 749	0	120 000
	Cuelec	69	17 185	22 559	0	92 946
	Cusan	69	9 335	20 306	0	107 537
	Cuwaste	69	6 598	13 080	0	63 799

Table 3: VRS input-oriented DEA efficiency scores for all local municipalities for 2007

Local municipality category	Number of municipalities	Efficient municipalities, efficiency score (VRS_TE) = 1	% of efficient municipalities	Average efficiency scores, RTS(VRS) ORT(IN) STAGE(2)
All	170	Aganang LIM352	7.64	0.173
		Buffalo City EC125^a
		Bushbuckridge MP325
		King Sabata Dalindyebo EC157
		Koukamma EC109
		Lekwa-Teemane NW396
		Mangaung FS172^a
		Mbombela MP322
		Mnquma EC122
		Msunduzi KZN225
		Thembisile MP315
		Thulamela LIM343
		Ubuhlebezwe KZN434 (13)

Note: ^aBuffalo City Municipality (East London) and Mangaung Municipality (Bloemfontein) became Metropolitan Municipalities after the local government elections of 18 May 2011.

Table 4: VRS input-oriented DEA efficiency scores by type of municipality for 2007

Local municipality category	Number of municipalities	Efficient municipalities, efficiency score (VRS_TE) = 1	% of efficient municipalities	Average efficiency scores, RTS(VRS) ORT(IN) STAGE(2)
B1, secondary cities	19	Buffalo City EC125	47.36	0.838
		City of Matlosana NW403
		Drakenstein WC023
		Madibeng NW372
		Mangaung FS172
		Matjhabeng FS184
		Mbombela MP322
		Msunduzi KZN225
		Stellenbosch WC024 (9)
B2, larger towns	24	Hibiscus Coast KZN216	33.33	0.625
		King Sabata Dalindyebo EC157
		Mafikeng NW383
		Moqhaka FS201
		Mossel Bay WC043
		Msukaligwa MP302
		Oudtshoorn WC045
		Randfontein GT482 (8)
B3, smaller towns	79	Abaqulusi KZN263	10.12	0.201
		Amahlathi EC124
		Koukamma EC109
		Lekwa-Teemane NW396
		Maluti A Phofung FS194
		Matatiele EC441
		Mkhondo MP303
		Ngwathe FS203 (8)
B4, rural municipalities	48	Aganang LIM352	18.75	0.377
		Bushbuckridge MP325
		Greater Tzaneen LIM333
		Mnquma EC122
		Msinga KZN244
		Nongoma KZN265
		Thembisile MP315
		Thulamela LIM343
		Ubuhlebezwe KZN434 (9)

Source: Author's own calculations.

Table 5: Determinants of local efficiency performance in South Africa

Variable	(1)	(2)	(3)
	Model 1	Model 2	Model 3
FiscalAut	0.003*	0.003	0.003*
	(0.002)	(0.002)	(0.002)
power_func	0.199	0.183	0.221*
	(0.126)	(0.125)	(0.125)
FisAut_power	–0.005**	–0.005**	–0.006***
	(0.002)	(0.002)	(0.002)
FisAut_HE	–0.001	–0.001	–0.000
	(0.001)	(0.001)	(0.001)
perc57vacant	–0.002*	–0.002*	–0.002
	(0.001)	(0.001)	(0.001)
percorgavacant	–0.000	–0.000	–0.000
	(0.001)	(0.001)	(0.001)
popgrowth	–0.000	–0.001	–0.001
	(0.001)	(0.001)	(0.001)
MMqual	0.170***	0.168***	0.170***
	(0.061)	(0.060)	(0.060)
FMqual	0.039	0.034	0.028
	(0.059)	(0.058)	(0.058)
TSqual	–0.015	–0.007	–0.022
	(0.081)	(0.080)	(0.080)
percnoschooling	–0.002	–0.005	–0.004
	(0.010)	(0.010)	(0.010)
percgrade12	0.015	0.016	0.020*
	(0.012)	(0.011)	(0.012)
perchigher	0.061	0.055	0.041
	(0.044)	(0.044)	(0.045)
percnoincome	–0.019	–0.032	–0.039
	(0.021)	(0.022)	(0.023)
perc12800zar	–0.006	–0.007	–0.008
	(0.005)	(0.005)	(0.005)
perc12801zar	–0.121***	–0.115***	–0.114***
	(0.042)	(0.041)	(0.042)
freewater	0.000***	0.000***	0.000***
	(0.000)	(0.000)	(0.000)
freeelec	0.000	0.000	0.000
	(0.000)	(0.000)	(0.000)
freesan	0.000**	0.000**	0.000**
	(0.000)	(0.000)	(0.000)
freewaste	–0.000**	–0.000**	–0.000**
	(0.000)	(0.000)	(0.000)
More50Perc		0.114*
		(0.062)
majseats			0.003*
			(0.002)
Constant	0.147	0.115	–0.025
	(0.171)	(0.169)	(0.194)
sigma	0.212***	0.208***	0.209***
	(0.015)	(0.015)	(0.015)
Observations	109	109	109

Notes: Dependent variable: DEA-VRS local efficiency scores, 2007. Bold data indicate statistically significant coefficients. Standard errors in parentheses. ***p < 0.01, **p < 0.05, *p < 0.1.

Table A1: Variable definitions and data sources

Variable name	Variable label	Data source
Input
TotalOpEx	Total operating expenditure (in R×1000) for financial year 2007/08	National Treasury, Local Government Budgets and Expenditure Review (preliminary in-year figures)
Outputs
totalpop	Total population per municipality from 2007 Community Survey	2007 Community Survey, Statistics South Africa
cuwater	Number of consumer units receiving water from municipality	2007 Non-Financial Census of Municipalities, Statistics South Africa (P9115 Unit data 2007)
cuelec	Number of consumer units receiving electricity from municipality
cusan	Number of consumer units receiving sanitation from municipality
cuwaste	Number of consumer units receiving waste management from municipality
HHelec	Number of households with access to electricity (for lightning)	2007 Community Survey, Statistics South Africa
HHwater	Number of households with access to clean water (piped water)
HHrefuse	Number of households with access to adequate refuse removal service
HHsanit	Number of households with access to toilet facilities
Fiscal autonomy/level of fiscal decentralisation
FiscalAut	Share of local own sources of revenue (taxes and service charges) in total revenue	National Treasury, Local Government Budgets and Expenditure Review (preliminary in-year figures)
power_func	Dummy variable = 1 if the municipality has the powers and functions allocated to provide all four basic services: water, electricity, sewerage and sanitation, and solid waste management	2007 Non-Financial Census of Municipalities, Statistics South Africa (P9115 Unit data 2007)
Institutional capacity
perc57vacant	Percentage of vacant posts of total posts in section 57	2007 Non-Financial Census of Municipalities, Statistics South Africa (P9115 Unit data 2007)
percorgavacant	Percentage of vacant posts of total posts in the organogram
MMqual	Dummy variable =1 if the municipal manager has a postgraduate degree	Municipal Demarcation Board Capacity Assessment Database 2007/08
FMqual	Dummy variable =1 if the financial manager has a postgraduate degree
TSqual	Dummy variable =1 if the manager for technical service has a postgraduate degree
Socio-economic factors
percnoschooling	Percentage of the population with no schooling	2007 Community Survey, Statistics South Africa
percsomesec	Percentage of the population with some secondary education
percgrade12	Percentage of the population with secondary education
perchigher	Percentage of the population with higher education
percnoincome	Percentage of the municipality population with no income
perc12800zar	Percentage of the population with a gross monthly income of ≤12 800 ZAR
perc12801zar	Percentage of the population with a gross monthly income of >12 800 ZAR
popgrowth	Population growth per municipality between 2001 and 2007, percentage
Political factors
Majseats	Percentage of council seats held by the majority party after the 2006 local government elections	The Independent Electoral Commission
More50Perc	Dummy variable =1 if the majority party won more than 50% of seats
Others
freewater, freelec, freesan, freewaste	Number of consumer units receiving free water, electricity, sewerage and sanitation, and solid waste management from municipality	2007 Non-Financial Census of Municipalities, Statistics South Africa (P9115 Unit data 2007)

Table A2: Descriptive statistics of the determinants of municipal productive efficiency

Variable	Number of observations	Mean	Standard deviation	Minimum	Maximum
FiscalAut	161	48.5	24.9	0.2	97.8
popgrowth	231	2.0	18.1	–45.0	69.0
perc57vacant	228	15.9	20.5	0.0	100
percorgavacant	164	18.5	26.0	0.0	100
MMqual	231	0.2	0.4	0	1
FMqual	231	0.1	0.4	0	1
TSqual	231	0.1	0.2	0	1
percnoschooling	231	8.1	3.7	1.7	25.0
percsomesec	231	20.1	4.7	8.2	34.0
percgrade12	231	7.7	3.5	1.7	19.8
perchigher	231	3.3	2.0	0.5	11.6
percnoincome	231	1.9	1.0	0.1	5.3
perc12800zar	231	20.3	4.9	8.8	43.6
perc12801zar	231	1.5	1.1	0.1	5.4
majseats	231	71.3	14.5	33.3	96.3
More50Perc	231	0.87	.33	0	1

Table A3: VRS-input oriented DEA efficiency scores by type of municipalities for 2007, using 2007 Community Survey outputs

Local municipality category	Number of municipalities	Efficient municipalities, efficiency scores (VRS_TE) = 1	% of efficient municipalities	Average efficiency scores, RTS(VRS) ORT(IN) STAGE(2)
All	170	Buffalo City	4.70%	0.132 (86.8%)
		King Sabata Dalindyebo
		Mangaung
		Matjhabeng
		Moqhaka
		Thulamela
		Bushbuckridge
		Lekwa-Teemane (8)
B1	19	Buffalo City	26.31%	0.748 (25.2%)
		Mangaung
		Matjhabeng
		Mbombela
		Stellenbosch (5)
B2	24	King Sabata Dalindyebo	8.33%	0.219 (78.1%)
		Moqhaka (2)
B3	79	Nkonkobe	10.12%	0.331 (66.9%)
		Matatiele
		Masilonyana
		Nala
		Maluti A Phofung
		Ngwathe
		Abaqulusi
		Lekwa-Teemane (8)
B4	48	Mnquma	18.75%	0.514 (48.6%)
		Port St Johns
		Msinga
		Nongoma
		èNdondakusuka
		Thulamela
		Aganang
		Nkomazi
		Bushbuckridge (9)

CoGTA (Cooperative Governance and Traditional Affairs), 2009. State of local government in South Africa, overview report. Working documents, Department of Cooperative Governance and Traditional Affairs, Pretoria, South Africa.

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