According to the Constitution of South Africa, municipalities are expected to plan, budget and administer activities in such a way that the basic requirements of their respective communities and their social-economic development are promoted. Municipalities are expected to always conduct themselves responsibly in the collection and expenditure of the finances as per the stipulations of Section 195(1) (South Africa, 1996). Furthermore, Section 152(1) of the Constitution (1996) outlines that local municipalities are eligible to receive their proportional and fair portion from the revenue that is produced by the central government (Shava, 2020). The South African constitution indicates that the Distribution of Revenue Act determines how revenue received by the national government will be distributed among local, provincial and national governments. The share that municipalities receive is deemed to be for the purposes of developing and servicing their respective communities with basic services, such as water, electricity, sanitation and housing. The constitution makes a provision that people have a constitutional right towards these basic services, which makes it difficult for municipalities to deny these services to members of the community when they fail to pay, thus, further complicating the task of municipalities to collect revenue. Specifically, Sections 160(2), 215 and 227 of the Constitution of the Republic of South Africa, 1996 pertain to municipal budget, revenue and expenditure (Molobela, 2016).

The MFMA 56 of 2003 provides the premises utilised to ensure effective financial management for municipalities (Shava, 2020). According to Molobela (2016), the purpose of the MFMA is to control municipal financial management as well as to stipulate how municipalities ensure efficient and effective management of revenue, expenditure, assets and liabilities. The Act outlines norms and standards for municipalities, which if followed by the municipalities should be able to attain prudent financial management. The Act further stipulates that municipalities are responsible for establishing governance frameworks for their respective entities, as well as a borrowing framework. The responsibilities of municipal financial management are also defined by the MFMA. For instance, Section 64 of the Act unequivocally outlines that the accounting officer is tasked with the management of the municipal revenue (Molobela, 2016).

Chapter three of the Local Government: MPRA, 2004 (Act 6 of 2004) provides for the recovery of rates from property owners by the municipalities. The Property Rates Act (2004) indicates that municipalities in South Africa ought to collect revenues that are adequate to meet their needs. According to this Act, the collection of revenue should be conducted in a way that is not different across municipalities and ought to be in a simple manner. Furthermore, chapter four of the Property Rates Act (2004) specifies the manner in which local municipalities should go about valuing and preparing for the general valuation of rateable properties. This includes how the preparation of valuation rolls, inspection of properties and appointment of values should be undertaken by the municipalities.

The Republic of South Africa has a multileveled state founded on the 1996 Constitution. The resultant multilevel government structure comprises nine provinces and 257 municipalities and is a product of the negotiations that resulted in the demise of the apartheid system and the establishment of democracy (De Visser, 2023). The local government system of South Africa is significantly premised on the country’s colonial past dating back as far as the 17th century when the first Europeans descended, inhabited the Western Cape in 1652 (Kaywood, 2022). The Constitution of the Republic of South Africa, 1996 (Act 108 of 1996) Section 151 contains provisions for the local government’s establishment as part of the government that is democratically chosen by the people to govern them. Furthermore, the constitution provides for a quasi-federal structure with provinces led by a democratically elected leadership possessing constitutionally guaranteed powers and functioning within a vastly combined multilevel government and financial system (De Visser, 2023). At the bottom of this hierarchical governance system, guaranteed by the Constitution of South Africa, is the local governments that are comprised of democratically elected councils (De Visser, 2023). Chapter 7 of the Constitution of the Republic of South Africa established local governments with both executive and legislative powers vested in its council (Govender & Ramodula, 2020). Municipalities are managed by the local government, and these local governments refer to political representatives, which are democratically chosen. Thus, the political party that wins in local government elections manages the local municipality where they elect a mayor to do so (Govender & Ramodula, 2020).

The constitution stipulates that the local government should exist interdependently and interrelatedly with the provincial and national governments. The Local Government: Municipal Structures Act, 1998 (Act 117 of 1998), as amended, provides guidance on the classifications and forms of municipalities aligned with the vision of democratic and developmental local government. The establishment of local governments was primarily to abate the dependency syndrome of municipalities on funding from provincial and national governments, as well as the dependency of the local communities on the national government (Kaywood, 2022). According to Trojanek et al. (2024), local communities’ budgetary concerns in many countries across the globe have been shifted from national governments towards local governments in recent years. The development of local government means that the communities and local authorities are committed to ensuring that the local areas are maintained and developed. According to the Constitution of South Africa (1996), local governments have constitutionally guaranteed powers and possess substantial fiscal sovereignty. Ababneh and Rawabdeh (2018, p. 46) also state in their study that it is the responsibility of the communities to elect the board of the municipality that will be able to cater for their basic needs. The local municipality of any city is tasked with providing the basic services to the community residents (Ababneh & Rawabdeh, 2018). However, in providing these services, they are tasked with the collection of revenue as the funds they receive from the regional government are not enough to develop the city and communities in a way that it should be. The White Paper on Local Government (1998) has outlined that every local administration needs to have enough financial resources to be able to ensure that all its responsibilities have been taken care of for the purposes of the development. However, the development of local government has not been up to par in South Africa, as there is an issue of poor revenue collection. A study by Chauke (2016) on municipal revenue collection also supports that the issue of poor service delivery is also driven by the fact that the income and spending of most municipalities do not correspond. According to Kaywood (2022), most municipalities have been battling and lagging in service delivery in areas such as housing, electricity, refusal removal, water and sanitation. This suggests that local municipalities experience challenges in collecting revenue from communities but are expected to make developments. Usman et al. (2020) also discuss in their research around local government optimisation that if the local government municipality can strengthen its revenue collection, it will positively impact the development of local government, and this will result in the communities’ basic needs being met. Given the contributions from various contributions in this section on ‘legal framework’, it is evident that the reviewed relevant legislative and policy instruments that guide municipal revenue in all South Africa municipalities, have a have a significant impact on the revenue collection practices.

According to Życzkowska and Dziuba (2023), municipal own-source revenue relates to funds that according to law are at the disposal of local governments on a permanent basis or as revenues that originate from the local government efforts in full and indefinitely, with a certain degree of freedom in determining them and which are related to the local economic base. In the South African context, municipal own revenue comprises mainly property rates, levies and service charges. The South African constitution in Section 229 indicates that municipalities are required to impose property taxes, rates and other charges on the services that they provide to the community residents. Local municipalities mostly buy water and electricity and sell it to the businesses and residents. Furthermore, municipalities are expected to become creative and search for business opportunities as a means of raising income (Masungini et al. 2023). Hence, this own revenue is referred to as revenue collected. According to Trenovski et al. (2022), property tax and user service charges constitute the major component of ‘own’ revenue generation by municipalities with property tax being payments made by people who own properties within the administrative jurisdiction of municipalities. Similarly, Upadhyay and Manandhar (2017) argue that the primary component of municipal own-source revenue is attributed to taxes followed by rates or service charges. As such, the fees charged on the valuation of properties and user charges comprise revenue that is paid directly for services rendered by the municipality (Manyaka, 2014; Trenovski et al., 2022). More specifically, property taxes based on the value of land and buildings are often regarded as the largest source of income for municipalities (Manyaka, 2014).

Furthermore, user charges are fees for water, sewage, refusal collection and electricity.

According to Shava (2020), the majority of municipalities in South Africa rely on user charges for services such as water and electricity to accumulate revenue. It is widely accepted, given the inadequate property tax base within South African municipalities, that property tax as a stand-alone source of income is not sufficient to cater for the demand and supply of public services. Municipalities must explore cost recovery charging systems to supplement property tax income (Manyaka, 2014). Thus, municipalities sometimes collect money for parking fees and permits, business licenses and permits, which are required for opening and operating businesses. Municipalities also rely on fines and penalties from traffic violations as well as building code infractions, etc. Lastly, municipalities can also collect rent from leasing out buildings and facilities that they own (Chauke et al., 2024). However, municipalities experience challenges when it comes to the collection of this revenue (of which the challenges are to be discussed later in this study). Additionally, Schoeman (2011) also supports this by saying that most rural municipalities are averagely collecting low revenue, and this makes them dependent on the intergovernmental transfers. However, they cannot depend much on the revenue from the national level because the act governing the municipalities suggests that they need to be able to fund the expenses of the local government development through the collected revenue. It is therefore important for the cities to improve their revenue collection as this can reflect badly on them as it means there will not be enough funds to fund their operations. Upadhyay and Manandhar (2017) argue that municipal own-source revenue is the most stable and predictable source of income for municipalities as compared to intergovernmental transfers. With revenue planning being highly dependent on rigorous and precise market forecasting, municipal own-source revenue becomes a very vital component to enable local municipalities in fulfilling their primary mandate of service delivery (Molobela, 2016). James and James (2016) establish that revenue needs to be projected, rather than being awaited over time or at some given point in time.

Intergovernmental transfers are the second form of revenue for municipalities. These are transfers that are made from the national level to the local government, meant to reinforce the capacity of local administration in providing services to the community residents. According to De Visser (2023), intergovernmental transfers are primarily for the purpose of supporting municipal own revenue. Kahn et al. (2011) state that municipalities receive their ‘equitable share’ from the national level, and the share is often referred to as conditional and unconditional grants. In South Africa, the equitable share is regarded as the unconditional grant, which municipalities receive from the national fiscus (Manuel & Erasmus, 2024). The national government provides funding for basic service provision through transfer of funds from the national budget to provinces and municipalities through unconditional fair sharing of revenue and conditional grant funding (South African Local Government Association [SALGA] Senior Management Induction Programme, 2014). De Visser (2023) suggests that the purpose of unconditional national government transfers is primarily threefold, namely:

The equitable share of revenue obtained nationally and distributed among provinces and municipalities is provided for in the South African Constitution (Manuel & Erasmus, 2024). In order to avoid bias in the distribution of the revenue by the national government, a formula is utilised based on objective data. Thus, the revenue is not divided arbitrarily in a way that benefits other municipalities while disadvantaging others (Local Government Equitable Share [LGES] Formula Review, 2012). The LGES Formula constitutes five basic elements as stated in Equation 1 (LGES Formula Review, 2012):

BS is the basic services component; D is the development component; I is the institutional support component; R is the revenue-raising capacity correction and C is a correction and stabilisation factor.

Herein,

Thus, overall, the grants are dependent on the location of the municipality, the size of the municipality and the population of the municipality that the municipality caters for. Often when the administration is not fully ethical, they tend to misuse these funds as they do not really work for them but come freely as grants from the national level, and this is the reason most audit outcomes from the Auditor General are not clean audits. However, De Visser (2023) argues that failure of a municipality to raise own revenue will not be compensated by the national government transfers. While unconditional grants have no criteria or prescriptions, conditional grants are earmarked for specific purposes (Balie & Horn, 2021). In South Africa, four broad types of conditional grants are available for municipalities, namely supplementary grants, specific purpose grants, indirect grants and disaster response grants. The majority of transfers under conditional grants are for capital expenditure for infrastructure and capacity building under the specific purpose grants, comprising 72%. According to Tafeni and Mngomezulu (2025), this portion of the conditional grant is commonly known as the municipal infrastructure grant (MIG). The MIG is followed by the indirect grants constituting 14%, which are available for capacity and institutional purposes. After indirect grants, supplementary grants (comprising 13% proportion of the entire conditional grants) are deemed general grants that complement programmes partially financed by municipalities. Lastly, there are the disaster response grants (1%), which capacitate municipalities to respond to disasters or emergencies of diverse kinds. Municipalities need to apply most of the times for them to acquire the conditional grants, and they get to be issued accompanied by a detailed grants framework, which stipulates conditions for the grant (De Visser, 2023). According to SALGA (2014), municipalities are required to formulate and present business proposals to the national transferring departments and need to report on the financial and non-financial performance related to the grant. It is evident that contributions from the different sources in this section such as those by De Visser (2023) have implications for the LGES Formula. The LGES should be re-looked in response to some of the unique revenue collection challenges, which are experienced by rural municipalities. Sources such as De Visser (2023) posit that the 10% equitable share as per the LGES attempts to address fiscal imbalances ensures fair distribution of resources across the country, pursues national policy priorities and so forth. This article argues that the LGES Formula excludes other key quantitative and qualitative criteria such as the rurality of municipalities, which include the provinces of Limpopo, Northern Cape, Eastern Cape, KwaZulu-Natal and North West; geographical distance that is pervasive in province such as the Northern Cape. Future studies should explore the implications of the phenomena associated with the rurality of some municipalities, such as the emerging opportunities of rates and taxes and other services being received in the villages of rural municipalities. Furthermore, the cost of providing services in municipalities, which are located in a province such as the Northern Cape with vast geographical distances, significantly increases the cost of service compared to other provinces.

Municipalities across the globe can receive revenues from donor funding or grants that are received from international agencies (e.g. World Bank, UN-Habitat). Municipalities can also borrow under Section 230A of the Constitution, stipulating conditions of borrowing for municipalities. The section provides for conditions for municipal borrowing, and usually they are permitted to borrow for capital expenditures. According to Slack (2009), municipalities have the capacity to borrow funds from the financial markets for the purposes of capacitating the economic infrastructure component of their capital budget. Borrowing for current expenditures is only permissible if the repayment of the loan will be done in the same year (De Visser, 2023). Furthermore, the Local Government: MFMA 56 of 2003 has established a borrowing framework that stipulates stringent conditions for municipal borrowing. On the other hand, municipal borrowing is not guaranteed by the national government; as such, a municipality’s borrowing capacity depends on prudent financial management, viable own revenue management and the type of infrastructure projects (Slack, 2009). Most metropolitan municipalities and big local municipalities have the capacity to borrow because of their potential revenue streams, such as property rates and service, acting as sureties for the loan. Lastly, other municipalities have in the past relied on the issuance of bonds as a form of raising funds for capital expenditure (De Visser, 2023).

Shava (2020) indicates that most rural-based municipalities lack the capacity to fulfil their revenue collection mandate because of the lack human resource skills and poor commitment, which manifests in dismal performance in financial management. For increasing revenue compliance, municipalities must ensure that their job descriptions, competency requirements, advertisements, selection criteria and appointments are associated with the requirements set out in the regulations (National Treasury Republic of South Africa, 2011). According to Kaywood (2022), most municipalities are incapacitated because of plenty of vacancies and instability owing to high labour turnover in critical areas, which possibly affects their revenue collection. Manyaka and Madzivandila (2013) state that the skills of the staff and ability to plan are also a challenge when it comes to poor collection of revenue; this is because the local administration is run through politics and most comrades without adequate qualifications are in the administration. Municipalities are governed by systems and legislations, for instance, Municipal System Act, White Paper on Local Government, MPRA, MFMA, etc. And not having people with an understanding of these systems can be a challenge on its own when it comes to the collection of revenue because these systems need to be understood for a proper execution.

One of the common challenges with revenue collection in South Africa is political interference and pressure. As such, numerous academic works exist on pertaining to the politics-administration impediments that often affect municipalities in delivering their mandate effectively towards the local communities (Mbatha, 2020). The political atmosphere in the local governments has a significant impact on local revenues (Trenovski et al., 2022). Despite the existence of a prudent legislative guiding framework such as the MFMA, their application may be compromised by frequent political pressures to decrease and soften revenue collection, especially in times of elections (Kipilimba, 2018). The South African political sphere is highly contested with political parties often mobilising support through means that mostly involve service delivery and cost-of-living protests (Mamokhere & Kgobe, 2023). Intra- and inter-political party concerns, such as political infighting and rivalry, all adversely impact the ability of municipalities to collect revenue as they often spill over to communities (Kaywood, 2022). Political infighting and its adverse impact on revenue collection can be a future reference and precedence for residents to circumvent payment of municipal services, which could create ripple effect. In the future, there could be reluctance and further protests if the municipalities seek to appropriately follow and implement the existing legislative frameworks. Furthermore, political battles between the Mayor and Municipal manager have been well noted in literature (Ambe & Badenhorst-Weiss, 2012; De Visser, 2010). According to Maseko et al. (2023), municipalities are comprised of technocrats and politicians; however, politicians often have the final say on municipal decisions. A study by Ababneh and Rawabdeh (2018, p. 48) also suggests that in most cases, politicians have an influence when it comes to revenue collection because they tend to overlook the systems of the municipality when looking into receiving votes to be in power.

Another prominent challenge that is affecting municipal revenue collection is the proliferation of informal settlements. Informal settlements are a significant section of the local communities that are not included in the formal revenue system, thereby restricting the revenue base for municipalities (Feyzipour & Janbozorgi, 2025). Research has indicated that including these sections of the community by providing them with formal title deeds and access to basic services can significantly enhance both the financial stability of municipalities as well as these residents’ quality of life (Smit, 2019). Incorporating these areas into the formal economy could involve establishing systems for legalising property ownership and implementing gradual integration strategies to avoid social tensions. In authors’ view, this approach would not only increase tax revenue but also promote social equity and inclusivity.

Corruption is defined as the improper influence or abuse of entrusted discretion, and bribery is a subset in which money’s worth is the persuasive lever used (Svensson, 2005). According to Pozsgai-Alvarez, J. (2020), corruption is the misappropriation of authority for individual gain, and the misappropriation depicts a departure from the societal acceptable norms. The word corruption emanates from the Latin word corruptus, which entails a deviation from the ethically accepted conduct stipulated in traditional and civic morals, ethics and laws (Dassah, 2008; Dye, 2007). Furthermore, corruption deteriorates municipal revenues, causes public talent to become rent seeking and manipulates the state of public expenditure (Kufandarerwa, 2017; Mauro, 1995). Corruption pertaining to municipal revenue could also occur in the form of black markets, municipal taxes and rates evasion, bribery and kickbacks. These practices involve expenses (transfer costs) in the form of net loss for the municipalities and reduce the motivation to embark on creative undertakings. Corruption tends to spiral over into other forms of malpractice (Dassah, 2008). For instance, when businesses are pressured by corrupt officials, they tend to practice defective pricing whereby contractors inflate their costs to increase profits or limit their losses and costs of labour. Alternatively, mischarging frauds occur whereby a contractor or suppliers fraudulently inflate the cost of labour or materials on cost-plus contracts (Cascarino, 2013). Corruption has adverse effects on the functioning of government departments and community service delivery at large, including municipalities (Basheka, 2008). Communities continue to be deprived of essential and extremely needed services as a result of corrupt activities, and this often leads to an escalation of service delivery protests (Chauke et al., 2024). It is therefore imperative that corruption can be extremely decrease municipal funds particularly through the improper procurement systems, which cause poor service delivery leading to municipalities underperforming in their mandate. Mitigating corruption is a daunting task; nonetheless, local municipalities with the assistance of stakeholders can improvise on whistleblowing methods towards abating corruption in its various ways for the purposes of improving communities that rely on services from local municipalities (Mamokhere & Kgobe, 2023).

However, the challenges do not have to do only with the administration or the poor backgrounds; the billing system not working properly can be an issue. According to the Department of Cooperative Governance and Traditional Affairs (2014), an effective and vibrant billing system and revenue are paramount in having an operational municipal financial system. In most cases, the electricity is being altered, and water is being stolen, and this affects the billing system, and it all leads to incorrect billing, slow billing and not processing of some invoices (Mafunisa Consulting-Local Government Sector Education and Training, 2019). The absence of a prepaid and real-time electronic billing system results in municipalities resorting to traditional and manual billing systems, which is associated with numerous challenges (Mofokeng et al., 2025). For instance, sometimes residents are not accessible at their homesteads during billing for electricity and water, and this results in municipalities relying on estimates, which further exacerbates the situation by causing dissatisfaction among ratepayers. When ratepayers are not satisfied with the manner in which they are billed they will simply refuse to pay, thereby hampering revenue collection.

Numerous studies have examined the concept of lack of awareness and negative attitude as pertains to municipal rates and taxes and their consequences on municipal revenue collection (Nkuna, 2021; Out & Anam, 2019). Community awareness plays a significant role in the collection of revenues by municipalities and often communities that exhibit a negative attitude towards payment of municipal revenue services, consequently leading to rebellion against payment of municipal accounts (Nkuna, 2021). In some cases, community members are aware of the operations of municipalities and the role that paying for services is essential for the sustainability of municipalities. Despite this knowledge, they do not pay for fees because of discontentment with the way municipalities are operated, especially the issue of a lack of accountability on the part of municipalities as well as failure to satisfactory deliver services as per the expectations of the community (Nkuna, 2021). In this regard, municipalities should strive to provide information to the community pertaining to the revenues received as well as the expenditures made. It has been observed that informed and involved ratepayers are more willing and aware of the duty to pay for their services. Moreover, there is a need for municipalities to create mutual trust with the ratepayers. Trust towards the municipalities and the trustworthiness of the local governments are related (Fjeldstad, 2004). The absence of trust dissuades citizens to comply and voluntarily cooperate with laws and regulations that focus on revenue collection. Furthermore, trust among ratepayers themselves also significantly contributes towards their willingness and readiness to pay their dues. Thus, ratepayers who hold distrust in their colleagues and counterparts in paying their dues will most likely not find any motivation to pay their rates. Consequently, municipalities that desire a positive trajectory in their revenue collection need to transform negative awareness. This can be achieved through investment in awareness and educational campaigns that aim to conscientise citizens on the functions of the municipality and the essence of paying rates (Nkuna, 2021).

Environmental forces such as economic trends, social forces, technology and legal forces continue to negatively affect municipalities in their quest to raise revenue. For instance, recently, complications because of the recent coronavirus disease 2019 pandemic have resulted in the revenue collection base for municipalities dwindling in recent years (Shava, 2020; Życzkowska & Dziuba, 2023). From the economic perspective, unemployment, poor economic performance and global financial crisis are contributing forces that hamper the potential of municipalities to raise funding. Therefore, it can be contended that another factor that can be affecting revenue in the local municipalities is categorisation mostly by rural areas. According to Trenovski et al. (2022), one of the major determinants of local revenue collection is the local population. Attributes such as the population size and its demographic composition influence the ability of the municipalities to collect revenue. While metropolitan municipalities are better positioned to collect revenue because of their urbanisation and having a strong tax base, rural-based municipalities struggle to raise finances to meet their basic requirements (Balie & Horn, 2021). However, Section 96 of the Municipal System Act (Act 32 of 2000) suggests that every municipality must collect all monies due to it, be it rural or urban areas. The Municipal System Act says revenue must be collected from either rural or urban area, but when it comes to the rural areas, the collection of revenue is poor (Manyaka, 2014, p. 134). Hence, the biggest factor in revenue collection arises from rural areas. This is because rural areas are dominated by residents who do not have any revenue base, and most households are suffering from unemployment. Unemployment hinders progress because the unemployed cannot afford the services but expect to be serviced by the municipality (Balie & Horn, 2021).

There is a prevailing culture among both rich and poor South African residents, which is associated with non-payment and entitlement (Enwereji & Potgieter, 2018). The concept of entitlement has been defined as a ‘pervading sense that one deserves more and is entitled to more than others’ (Nkomo, 2022). The culture of entitlement is deemed to be prevalent in the context of South Africa, contributing to exacerbated levels of non-payment by rate payers. Primarily, this culture of entitlement is traced back to the political emancipation of the black populace from the Apartheid system, whereby the new dispensation was associated with free basic services, such as water, electricity, sanitation and housing (Fjeldstad, 2004). Another cause of entitlement culture is that during election campaigns, politicians tend to make political promises to reduce service charges and the general cost of living, which in the aftermath will cause the electorate to have expectations they will fail to meet. For Shava (2020), the culture of non-payment appears not to be a matter of choice by some rate papers but rather a result of poverty and high levels of unemployment, which is clearly visible because of vivid demarcations between the rich and poor in the society. According to Molobela (2016), growing poverty and incessant poverty levels within the local communities are the major contributions to non-payment of municipal services. This culture of entitlement severely impacts revenue collection in South Africa as it has been vividly entrenched in the society (Franks, 2014). With the growing prominence of the younger generation, where the spirit of entitlement is very pervasive, this factor is expected to contribute significantly towards non-payment of municipal services (Nkomo, 2022).

According to Shava (2020), lack of commitment on the part of public officials is regarded as one of the major impediments towards revenue collection. A study by Masiya et al. (2021) established that there is a pervasive character among municipal officials when it comes to being serious with their jobs and striving to be excellent in performing their duties.

Thus, there is a culture of mediocrity that reigns in most municipalities, whereby commitment to values of service delivery is lacking. In revenue collection, the lack of commitment manifests in various ways, which include failure to send reminder letters to residents who have outstanding dates. Masiya et al. (2021) cite that the existence of numerous negative factors around municipalities dissuades public municipal officials from being committed. For instance, political harassment and interference in the running of municipal affairs, corruption, poor infrastructure, unwillingness and inability to pay by ratepayers all combine in complicating the task of revenue collection by municipal officials. Consequently, it will take an extremely highly committed and strong-willed official to excel and strive in the non-conducive working environments around municipalities (Masiya et al., 2021).

Even though sources such as De Visser (2023) are of the view that the 10% equitable share as per the LGES formula attempts to address fiscal imbalances, ensure fair distribution of resources across the country, pursue national policy priorities and so forth; the authors argue that it excludes other key quantitative and qualitative criteria such as the rurality of municipalities of South Africa’s rural provinces, as well as geographical distance challenges in some provinces such as Northern Cape, which increase the cost of municipal services. Empirical investigations should be undertaken by researchers in future studies on the constructs of the rurality of the municipalities and the vast geographical distance as it affects the equitable share. Furthermore, even though sources such as Feyzipour and Janbozorgi (2025) and Smit (2019) posit that the proliferation of informal settlements poses a significant challenge that is affecting municipal revenue collection, little is mentioned of the challenges and opportunities associated with revenue collection in villages, which form part of rural municipalities. Currently, the villages pay for electricity services. However, they do not pay for other services such as water, property rates and taxes because of the fact that the properties that are built in villages have no title deeds. Such properties are built on land of traditional authorities. This matter should be explored further in future empirical investigations.

Many African countries rely on traditional and manual revenue collections systems, which are outdated. However, these systems are increasingly being replaced by automated systems, with some municipalities utilising a combination of the two. According to Nel-Sanders and Malomane (2022), traditional municipality is still prevailing and has been defined as traditional governance that uses ‘paper and pen’ in service delivery to their local communities associated with high levels of a ‘bureaucratic culture’. Thus, handwritten and manual processes are regarded as traditional approaches in performing revenue collection (Nel-Sanders & Malomane, 2022). Shava (2020) argues that municipalities in South Africa continue to shun new technologies that have emanated from the Fourth Industrial Revolution, which can immensely improve revenue collection. Most public officials in municipalities prefer the status quo by maintaining traditional and conventional approaches because of the discomfort they experience when switching to new methods (Symmonds, 2015). Traditional municipality is characterised by little use of technologies, poor service delivery, customers’ dissatisfaction and a lack of auto-control systems. Traditional methods are associated with a higher risk of leakage and inefficiency and are prone to corruption and misuse.

The realisation of improvements in revenue collection by municipalities in South Africa can be attained through the utilisation of recent and advanced technologies. Globally, online revenue collection systems are gaining momentum, thereby radically replacing the classical paper-based collection systems (Kweka & Chikoyo, 2021). Electronic systems in revenue collection involve electronic billing systems where ratepayers are able to interact with electronic gadgets to view, trace, query, request and pay for services delivered by the municipalities (Shava, 2020). Furthermore, smart systems that integrate various technologies in digital platforms and smart metering technology can be utilised to bill, remind, manage financial statements and bills, invoices and other related information by municipalities (Kiprop & Wanjira, 2024). Electronic payment systems, also regarded as digital payment, involve cashless systems where digital money is paid through electronic payment systems. Indisputably, the more advanced the technologies utilised in revenue collection, the more the revenue a municipality gathers. Mobile money, online banking and point-of-sale systems are some of the new methods that can be utilised by municipalities in collecting revenues. According to Nyoka et al. (2023), electronically running revenue collection significantly minimises corruption while satisfying customers because of the speed of service delivery as well as cutting down costs. A study by Mwaura (2019) revealed that the implementation of an electronic municipal billing system in the Tshwane Metropolitan municipality resulted in significant enhancements towards revenue collection by reducing errors and delays while improving security and transparency.

There are instances when municipalities opt to utilise the services of third parties instead of performing the tasks themselves. Municipalities are mandated with collecting revenues; however, at times, factors such as lack of skills and capacity limit their ability to effectively perform the task of revenue collection. In this case, they outsource the service to private partners, hoping to improve revenue collected. Collection of municipal revenue through the utilisation of contractors or PPP model is a common method (Upadhyay & Manandhar, 2017). Public–private partnerships enable cities to take advantage of the capabilities of the private sector in terms of skills and finances, which will subsequently propel the interests of the public.

Some municipalities outsource collection to firms, while others outsource revenue management systems that integrate digital platforms for billing, collection and tracking. The PPPs can also be used to fund specific projects by municipalities without depending on collecting revenue from the public (Feyzipour & Janbozorgi, 2025). According to Molobela (2016), municipalities often rely on the services of debt collectors in order to collect outstanding fees owed to them and may employ the services of several debt collectors at a given time.