Financial Sustainability Constraints Facing Namibian Local Authorities: A Comparative Study

Financial sustainability plays a key role in the long-term survival of any organisation. Local authorities with good financial sustainability respond strategically, instantaneously, and effectively to external changes and adapt their systems and processes to address new challenges. This study seeks to investigate the drivers of financial sustainability in the Ongwediva and Helao Nafidi town councils using a descriptive case study research design and critical realism philosophy. A sample of 28 respondents was selected from each town council out of a population of 110 using the snowball sampling method. Data collection was done using one-on-one interviews and document analysis and analysed using inductive analysis. The study found that similar drivers of financial sustainability of Namibian town councils are responsive tariffs and timely billing, budgetary control, and sufficient government subsidy. Contrary to alluded similarities, evidence also revealed that financial sustainability challenges faced by Namibian local authorities differs. On one hand, Ongwediva’s key unique drivers of financial sustainability are strong monitoring and evaluation mechanisms, sound debt credit control and cash flow management strategies, high employment rate and increased population. On the other hand, Helao Nafidi’s unique financial sustainability tool kits include good community rapport, educational awareness on the importance of paying their dues, proper aligned organisational structure, and credit control policy. Skewed evidence and disparities across local authorities’ state of financial sustainability were observed. As per the 2016–2018 financial reports, their financial performance is unstable, given the finding that they incurred both surpluses and deficits during some years, which threaten their long-term financial sustainability. The two local authorities were observed to have a low to medium favourable state of financial sustainability and they may face unfavourable financial health in future with Helao Nafidi at high risk than Ongwediva. The study recommends government to give sufficient subsidy and release such funding as per the local authorities’ financial year and devise a scientific fiscal equalization formula for allocating subsidies to local authorities. It is also suggested that local authorities should improve their fiscal capacity and revenue collection strategies like crafting policies, such as the green financial sustainability policy.