Expenditure Volatility and Provincial Government Reform in South Africa

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University of Cape Town

South Africa’s provincial governments were the subject of vigorous debate during 2007. This culminated in an official policy review, that included potentially far-reaching questions about their status, role and future existence. The review was initiated during a period marked by serious concerns about the capacity of provincial governments to implement programmes and services through budgeted expenditure. It focused on the ability of provinces to spend allocated revenues on activities adequately with a direct bearing on social and economic development. This debate was revisited by this research in focusing specifically on the question of provincial under-spending. the purpose was to investigate provincial expenditure preceding the 2007 policy review, with the objective to empirically observe the general shape, extent and pattern of provincial incapacity to spend revenues. Based on this, the idea was to consider how expenditure performance might rationally influence subsequent and continuing policy debate pertaining to the future configuration of provincial government. The research presents an analysis of provincial expenditure for a four-year timeframe (2002–2006), indicating that under-spending seems to be secondary to the more significant problem of spending volatility, or rapid shifts between under- and over-spending. the complexity of expenditure performance suggests that past and continuing debate about the wholesale or even partial restructuring of the provincial system of government needs to be moderated by a more incremental and escalatory series of responses.