This paper attempts to demonstrate the importance of the linkage between the presence of poverty and the nature of governance, something largely omitted from poverty studies in South Africa. The context of this investigation was the establishment of the new local government model (i.e. Developmental Local Government), which puts governance at the forefront of addressing poverty effectively. The new governance model adopts a multidimensional poverty paradigm in its Integrated Development Planning (IDP). However, in this study we have examined whether the approach adopted (i.e. Basic Needs) is necessarily the best multidimensional approach available. We have given preference to the capabilities approach with its emphasis on well-being where people are the beneficiaries of development rather than the basic needs approach where the emphasis is on goods and services as a means to good life. Sen's Capabilities Approach was operationalised by adopting a relatively new methodology (Le. fuzzy-set theoretic poverty measures) for measuring multidimensional poverty in the Khayelitsha Mitchell's Plain (KMP) magisterial district using the Census 2001 dataset. Our results show that unemployment, housing and low incomes need the most attention in KMP. Furthermore, the fuzzy-set measures, which view poverty as opaque and vague, yield more detailed policy information, thus preventing the single-policy response dominating many IDPs at present. As a medium term policy response, it is suggested that the implementation of the extended public works programme in KMP has the potential to significantly address both the material and non-material capability failure existing in KMP.