The economic case for virtual local government in South Africa

South African local government has entered a new era with the national local government elections of 5 December 2000 and has been legally empowered to expand its activities from its previously limited 'services to property' orientation into the promotion of social and economic development. Despite a dramatic extension of the role of local government in South Africa, legitimate doubts exist as to whether it possesses the requisite administrative capacity to adequately fulfill its new mandate. This paper argues that government failure, including local government failure, is now so pervasive in South Africa that municipalities are unlikely to be able to meet their expanded obligations. Accordingly, new models of local governance should be explored that can reduce the deleterious effects of local government incapacity. The paper then seeks to present the economic case for 'virtual local government' in South Africa.