The impact of the financial crisis on intergovernmental financial relations in South Africa

This chapter describes the transition of South Africa from the Union of 1910 to the post-apartheid unitary state of 1996, and the structure of the current intergovernmental fiscal relations system with strongly centralized control of broad-based taxes and provision for revenue sharing and redistribution among the provinces. The 2008–9 financial crisis has been only one factor in an emerging set of challenges relating to regional inequalities and the need for vast improvements in basic infrastructure and educational service delivery. A substantial youth profile in the country’s demographic profile provides the potential for economic growth but also the emergence of new forms of political activism. Federal fiscal reforms are aimed at improving efficiency and accountability in provincial service delivery. These reforms include development of mechanisms for performance-based funding in conditional grants, and the establishment of the Presidential Infrastructure Coordinating Committee to provide national infrastructure planning and oversight.