National Treasury 2022 System of Capacity Building for Local Government Diagnostic Review

This Diagnostic Review is the first step in the design of a broader multi-year programme intending to improve the outcomes of the current capacity building system as South Africa enters a new five-year administrative cycle arising from the October 2021 local government elections. The Review also aims to contribute to improving the value for money aspects of capacity building investments across all of government. The Review asks the question why, after 25 years of building local government’s capacity, improvements to performance appear minimal. Indeed, around two-thirds of municipalities appear to be in financial distress or dysfunctional in differing degrees; requiring interventions, sometimes repeatedly. The compilation of this Review relies on desktop data collection to provide the now comprehensive picture of the system at programme level over a 5-year expenditure window. Over 65 qualitative interviews were held across 29 organisations with key funding and supplier roles of parts of the capacity building system, plus a selection of the beneficiary municipalities. Although this Review was initially intended to satisfy the National Treasury’s need for an up-to-date picture of the system, it clearly has far reaching implications for all of government. Capacity Building vs. Capability Development Early in the research, stakeholders agreed–in response to emerging findings of the literature review–that the concept of ‘Capacity Building’ is insufficient for what the state actually wants to achieve and that a more appropriate and relevant concept is ‘Capability Development’. In short, ‘capacity’ refers to potential under ideal circumstances, while ‘capability’ refers to what is possible under actual (almost always not ideal) circumstances. ‘Capability’ incorporates a wide range of factors: individual skills, financial resources, business processes and systems, political stability, staff morale, staff turnover, effective use of technology, community participation and other contextual issues.