In mid-1997, Johannesburg faced a fiscal meltdown. Management problems, low tax compliance and a fragmented system of municipal budgeting and expenditure put the city’s budget in deficit. As Johannesburg’s core services deteriorated, a series of moves by the provincial government paved the way for robust reforms designed to ease the city’s financial problems. Under the leadership of newly appointed City Manager Ketso Gordhan, transformation manager Pascal Moloi, and a team of reformers, the city embarked on “Igoli 2002,” an effort to make municipal service provision more cost-effective by corporatizing its service providers. Although the new structure greatly improved the financial position of the city, the need to redistribute resources, coupled with a narrow tax base, led to recentralization of decision making in some areas and caused the experiment to depart from other “New Public Management” initiatives in other parts of the world. Setting up a workable regulatory structure also proved difficult. This case study describes the work of Gordhan and his team, demonstrating how the long-term success of municipal reforms depends not only on design but also on implementation.
Michael Woldemariam, Jennifer Widner, and Laura Bacon compiled this case study based on interviews conducted in Johannesburg, South Africa, in March 2011 and August 2012. Samuel Scott provided research assistance. Case published September 2012.
New Public Management
Public service delivery
Contracting out (creating semi-autonomous agencies)
Country of Reform