Rural areas are demographically, economically and politically important, being home to 38% of South Africa’s population. Although government has had some impressive achievements since 1994, rural areas remain places of poverty and unemployment characterised by underdevelopment and poor socio-economic conditions.

The Financial and Fiscal Commission found that certain conceptual, structural and fiscal challenges impede effective rural development spending and programmes. These are the lack of a common definition of “rural”, the complexity of concurrent responsibility for rural development, and the challenges of funding rural municipalities and provinces, which have limited economic activity and a narrow tax base.

The Commission highlights a number of opportunities, including that national government should drive efforts towards a comprehensive definition of “rural”, agricultural related transfers should be distributed equitably across provinces, functions assigned to national and provincial government should be reviewed, the growth potential of peri-urban and rural areas should be harnessed, and intergovernmental relations should be strengthened.

Report by the Financial & Fiscal Commission