Can commercialisation address consumer debt in local government : a case of South African metropolitan municipalities

Abstract

Consumer debt continues to challenge local government financial sustainability. There is a debate in the literature on whether developing countries should consider commercialising local service delivery. Using data from South African metropolitan municipalities, this study examines the impact of commercialising service delivery on consumer debt. Fixed effects modelling is adopted, and results show that commercialising sanitation increased consumer debt by 22.5 per cent, commercialising solid waste collection reduced consumer debt by 11.9 per cent, while commercialising electricity had no significant impact on consumer debt. These results imply that policymakers should consider the type and nature of public service when deciding its commercialisation.