Reply:

The local government equitable share formula requires every municipality to run a basic administration by funding the majority of its administration costs from own revenue to provide basic services to households. Due to inability by poor households to meet their obligations in full, the equitable share includes an institutional support component to help poor and rural based municipalities with limited resources to afford basic administrative and governance capacity to perform core functions and meet some of these costs. It provides a subsidy for basic municipal administrative costs to supplements the revenue that municipalities can raise themselves (including revenue raised through property rates and service charges). A revenue adjustment factor is applied in the equitable share to enable municipalities with less potential to raise their own revenue to receive a larger proportion of the allocation.

In addition, the Notice on upper limits for remuneration of municipal managers and managers directly accountable to municipal managers makes provision for remote allowance ranging between 4-10 percent of the applicable pay scales to support eligible municipalities to attract and retain critical skills in key positions.