Section 77 of the MSA describes the points at which a municipality must review and decide on a mechanism to provide a municipal service. These occasions include when an existing municipal service is to be significantly upgraded, extended or improved; when the municipality is restructured or reorganised in terms of the Municipal Structures Act (1998); when review is required by a provincial or national intervention; when a new activity is to be undertaken; when requested by the local community; when a review of the integrated development plan requires a review of the delivery mechanism; or when a performance evaluation requires a review of the mechanism.  
Either of the following two scenarios could be taken as the basis or starting point:

• The existing municipal service is to be significantly extended, upgraded or improved.

If this scenario is taken as the project starting point, it will require an acceptance and a decision in terms of Section 77 by a Municipality that it is necessary to extend, upgrade or improve a service that it offers for example a waste management system; water provision or even tourism;

• Review is required by a provincial or national intervention.

In terms of Section 139(1) of the Constitution, it is possible for a provincial government to take charge when a municipality fails to fulfil an executive obligation.       

The Constitution does not afford national government the right to intervene in local government matters.   However, with regard to waste management installations operated by local government the National Department of Environmental Affairs is the licensing and regulatory authority in terms of the National Environmental Management:  Waste Act No. 59 of 2008.  

Section 78 of the MSA provides that when a municipality undertakes an MSA section 77 review of its delivery mechanisms, it must first assess the provision of that activity through an internal mechanism, after which it may decide to explore the delivery of that activity by an external mechanism. If the municipality decides to explore service provision by an external mechanism, it must also conduct a feasibility study in terms of subsection (3). 

The heading to Section 78 is:

‘Criteria and process for deciding on mechanisms to provide municipal services’.   Section 78(1) states that:

When a municipality has in terms of section 77 to decide on a mechanism to provide a municipal service in the municipality or a part of the municipality, or to review any existing mechanism —

(a) it must first assess— 

(i) the direct and indirect costs and benefits associated with the project if the service is provided by the municipality through an internal mechanism, including the expected effect on the environment and on human health, well-being and safety;

(ii) the municipality’s capacity and potential future capacity to furnish the skills, expertise and resources necessary for the provision of the service through an internal mechanism mentioned in section 76;

(iii) the extent to which the re-organisation of its administration and the development of the human resource capacity within that administration,  as provided for in sections 51 and 68,  respectively, could be utilised to provide a service through an internal mechanism mentioned in section76;

(iv) the likely impact on development, job creation and employment patterns in the municipality; and

(v) the views of organised labour; and

(b) It may take into account any developing trends in the sustainable provision of municipal services generally. 

Thus Section 78(1) sets out a mandatory evaluation process which municipalities must undertake once it is determined in terms of Section 77 that a service delivery mechanism must be extended, upgraded or improved, or there has been provincial or national government intervention which requires this.