Leadership capabilities for improving financial management ineffeciencies in the public sector

Abstract

A sound public financial management system is a precursor for the enhancement of service delivery and poverty reduction in an independent, democratic South Africa. The government has, through various Acts, closely regulated financial management in public institutions to ensure sustainable resource management for future generations. However, complex challenges related to leading and managing such institutions have continued to monopolise the realities of public financial management in towns and cities. Basic amenities such as water, electricity, and roads remain in a deplorable state, more so in disadvantaged communities. A volatile, uncertain, complex and ambiguous socio-economic landscape has exacerbated overspending and further widened the budget deficit gap. Legislators and public office bearers spend most of the time debating and aligning policy instruments towards compliance with standard procedure. They have not considered the relationship between convectional management and their leadership capabilities and its effectiveness in enhancing proper financial management and the resultant service delivery. Thus, an appreciation of the dynamic nature of how various institutions interact with policies and procedures, and inherent values, societal beliefs, as well as ethics, in effective management of finances is key, with this option enabling a robust approach in the management of public financial systems. Essentially, the research applied a multi-methodology research approach, which used a combination of System Dynamics, Soft Systems Methodology and Critical Systems Heuristics. The study revealed that if the Municipalities could recruit competent staff, the level of irresponsibility in the accounts or finance department would reduce inefficiencies and accountability will improve. This research unearths how systems thinking can develop and enhance leadership capabilities in an environment that allows for continuous learning. The outcome of the research is pertinent to public financial management practitioners, managers, and politicians, on how to enact sustainable public financial management.