The Municipal Infrastructure Investment Framework (MIIF) classifies local municipalities (category B) into 4 sub-categories, namely B1, B2, B3 and B4. The B1 category comprises secondary cities and local municipalities with the largest budgets; the B2 category refers to local municipalities with a large town as its core; the B3 category defines local municipalities with small towns, with relatively small populations and significant proportions of urban population but with no large town at its core. Finally, the B4 category is comprised of local municipalities which are mainly rural with communal tenure and with, at most, one or two small towns in their area.

The MIIF also classifies district municipalities into 2 categories, namely C1 which refers to district municipalities that are not water services authorities, and C2 which defines district municipalities that are water services authorities (DBSA, 2011).