Municipal revenue generation and informal settlements: The case of the Chief Albert Luthuli Local Municipality

Abstract: Local Municipalities, primarily found in semi-urban and rural areas, are traditionally faced with the challenge of a very low or non-existent property rate and tax base. This is because of many informal settlements in rural villages, which disempower local municipalities to value the occupied individual land parcels for property rates and tax billing purposes. This paper aimed to assess whether the value created from the formalised properties can translate into property rates that the municipality can bill to generate revenue. The case study approach was adopted, and a case of the former Kangwane homeland and informal village areas in Chief Albert Luthuli Local Municipality was used. Data were collected over eleven months from January to November 2024 through key informant interviews and document analysis. Key informants were purposively selected from Chief Albert Luthuli Local Municipality employees from the Town Planning and Finance Departments and chosen beneficiaries. It was concluded that formalisation does not always translate into increased revenue from property rates generated from upgraded previously informal settlements. This is because most upgraded properties do not qualify to be valued and rated within the prescripts of the existing municipal property rates legislation and policies.

Keywords: Future trends, Informal settlements, Property rates, ROI

DOI: 10.54941/ahfe1007137

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