Municipal employees should not only strive towards attainment of predetermined goals, they should also ensure that in the quest for those goals they adhere to ethical standards. These ethical standards include efficiency, economy and diligence. In this manuscript factors contributing to efficiency and effectiveness in local government are identified and explained. These factors include internal organizational arrangements, institutional climate and motivation. The manuscript also focuses on the efficiency and effectiveness of various categories of municipalities in South Africa. These categories are Category A, Category B and Category C. Lastly, attention is paid to how municipalities can measure their responsiveness to communal needs, by measuring the efficiency and effectiveness of municipal services.