Falleti’s (2005) as cited in Myeni & Mvuyana (2016) indicate that a sequential theory of decentralisation separates three characteristics of decentralisation – firstly, decentralisation is a process; secondly, decentralisation considers the territorial interest of negotiating actors; and lastly, decentralisation incorporates policy feedback effects (Falleti, 2005). Falleti (2005) in Myeni & Mvuyana further attest to the fact that decentralisation is a process of reforms within the state, which is guided by public policies, which transfers responsibilities, resources or authority from higher or lower levels of governments. Cameron (2014) as indicated in SALGA points out risks that local government is exposed to, which prevent it from fulfilling its obligations – namely “(a) tensions between the political and administrative interfaces; (b) the inability of many councillors to deal with the demands of local government; (c) no clear separation of powers between political parties and municipal councils; (d) lack of clear separation between the legislative and executive; (e) inadequate accountability measures and support systems and resources for local democracy; as well as (d) poor compliance with the legislative and regulatory frameworks for municipalities” (Cameron, 2014).
Decentralisation gives rise to democratic mechanisms, which enable local government to differentiate between the needs and preferences of their constituents. It also affords an
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opportunity for communities to hold local government accountable for its actions (Ribot, 2002). Ribot (2001) further attest that the key objective of decentralisation are aimed at creating a more well organised and responsible form of government. Decentralisation is often recommended as an instrument to reconstruct an effective government, and ensuring that the resources are allocated equitably and effectively (White, 2011).
According to Ribot (2005) as cited in Myeni & Mvuyana (2016) indicate that decentralisation should be viewed positively as a way of strengthening institutions locally to play a representative, responsive and constructive role in the lives of people and in the areas where they reside. Effective decentralisation should involve the transfer of financial and decision- making powers from central government to local government. Falleti (2005) reaffirms that the downward re-arrangement of authority is achieved through a clear classification of downward reallocation of authority, much of which is dependent on the type of authority decentralised.
Falleti further identifies three types of decentralisation:
3.11.1. Administrative decentralisation
According to Falleti, (2005) as cited in Myeni & Mvuyana (2016), administrative decentralisation involves policies, which are transferred to local government, which includes transferring the administration and delivery of social services. It entails the devolution of decision-making authority over policies (Falleti, 2005). Administrative decentralisation occurs to an extent where national departments have flexibility in carrying out their mandate. In some systems, there is a constant contact between line departments, which in other systems, operate in parallel (Wittenberg, 2003). According to White (2011), administrative decentralisation is more about the way in which political institutions turn their policy decisions into allocative outcomes, through fiscal and controlling actions. In terms of delivering public services, decentralisation should not be the key, but the transfer of capabilities from the central government to local government (Cities Alliance, 2010). This leads to administrative de- concentration, in which the agents and local bodies, being on the spot and subject to centralisation, have decision-making powers. This means that local government is not only vested with exclusive powers of implementation, but also have certain decisional power reassigned by the central government. Therefore, the de-concentration of public services includes the handover of capabilities, held at central level, to the subordinated entities functioning in the region, because of a reduced form of administrative centralisation (Bilouseac
& Zahara, 2009).
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According to Cameron (2014), in South Africa, obligations are shared between the three spheres of government and this has caused problems in delivering housing to the poor. Due to the overlapping of these responsibilities, municipalities have been the most affected – because the authority that decides on the potential location of housing settlements rests with the province. The confrontation from middle-class communities made it difficult for provinces to identify land where houses are to be built. The areas often selected for poor communities are on the periphery, and budgets by line departments are not aligned with plans of municipalities.
At the same time, the infrastructure grants are transferred to municipalities whereas housing allocations allocated from the nation level to the province which results in lack of coordination within the spheres of government (Cameron, 2014).
3.11.2. Political decentralisation
In political decentralisation, the legislative functions rest with regions or local bodies. Prior to 1994, the legislative functions in South Africa were undemocratically given to Bantustan governments. In a democratic country, it is assumed that these are democratically constituted, as the powers rest with regions or local bodies (Wittenberg, 2003). Political decentralisation is generally defined as the degree to which political institutions track and collect the interests of citizens and turn them into policy decisions (White, 2011). Hence, developmental local government has been defined as a form of government, working closer to citizens and groups within a particular community in order to find sustainable ways of meeting the social, economic and materials needs of communities, in order to improve their quality of lives (Sebola, Phago
& Tsheola, 2013). A developmental government should be aimed at providing household with infrastructure and services; by making living spaces habitable, inclusive cities and towns and not neglecting rural areas; enhancing local economic development and encouraging community empowerment. It also forms an important part in facilitating and enhancing participatory local democracy (Reddy, 2010).
Ribot, (2002) argue that a distinction should be made between rights and privileges, which are important in the development of local self-sufficiency in the governance of local issues. It should be noted that privileges are delegated, and depends on the exploitation of the authority allocating them. These powers may be given and taken them away at any given time by the allocating authority. Citizens, who have representation and recourse, in the event that these rights are being denied (Ribot, 2002), however, should hold the same rights. It can be noted that decentralisation aims at achieving the central aspirations of political governance, and fulfil
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the citizens’ desire to have a say in matters that affect their lives. Decentralisation is a governance strategy that facilitates the transfer of power to those who are affected mostly by the implementation of such powers (Ribot et al., 2006).
3.11.3. Fiscal decentralisation
Fiscal decentralisation refers to a set of policies, which are intended to accumulate the revenues of a particular level of government. These policies undertake a variety of institutional forms, which involves the raising of transfers of subsidies from the central government, and the creation of new taxes by other governments (Falleti, 2005). According to Calitz and Essop (2013) fiscal decentralisation in the case of South Africa, was coupled with the creation of a fiscally - decentralised system of intergovernmental fiscal relations. This can be achieved through budgetary choices made by officials elected by the local people, who have the obligation to meet the full cost of their decisions through local taxes by ensuring effective allocation of resources (Calitz & Essop, 2013).
3.11.3.1. Objectives of fiscal decentralisation in housing development
According to Cameron (2014) municipalities, administering national housing programmes on behalf of provinces, as part of horizontal integration, aimed to situate decision-making authority around the administration of national programmes at the local sphere. Municipalities should coordinate decisions that relate to the comprehensive sustainability of human settlements. The Presidency (2010) adopted Delivery Agreements and Outcome 8 indicated that municipalities are able to take decisions; opportunities for the application of ground breaking planning principles arise, which contribute to the development of integrated and sustainable human settlements. Cameron further attest that delivery agreements indicate vertical integration as associated with certainty in respect of funding allocations, and decentralising the delivery authority to the local government. This will lead to accelerated delivery and enhanced spending patterns within municipalities, if implemented properly. The result should be a reduction in the rolling over of unspent funds, as well as a more synchronised approach to planning approval and implementation (Cameron, 2014).
Stanton (2009) argues that fiscal decentralisation is the transfer of necessary powers to democratically elected levels of government to raise and spend their own revenue in line with their respective responsibilities. Hence, in South Africa this has been complicated, and as a
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result, municipalities had already inherited diverse administrative and financial weaknesses from the previous government. In order to address financial disparities in South Africa dispersing revenues should be revised among the different spheres of government in order to eliminate disproportions, which were created by apartheid policies. Therefore, fiscal decentralisation should be aimed at assisting local governments to carry their constitutional mandates of providing basic services to all South Africans. As a result, it should ensure that municipalities have the necessary fiscal powers and authority to provide communities with basic services and perform functions outlined by the Constitution (Stanton, 2009).