KwaDukuza municipality (KDM) has once again come under fire for underspending on its capital budget, while the Covid-19 lockdown has caused ratepayer debt to soar.
These were two red flags that stood out in Mayor Dolly Govender’s first quarter budget and performance assessment report (covering the period July to September 2020) delivered at a council meeting on Thursday, October 29.
The report compared actual expenditure against budgets for the first quarter of the 2020/21 financial year.
Of the total R295 million capital budget, only R34 million of R65 million was spent in the first quarter – a shortfall of R31 million.
The mayor warned each department to plan correctly and spend their budgets before the end of the financial year.
The trend of underspending has been a consistent shortcoming.
Last year, KDM underspent its capital expenditure programme by around R108 million, or 65% of budget.
The money was intended for critical projects ranging from electrical upgrades to road maintenance and housing.
In the same year the municipality also had not spent conditional grants of R39.9 million.
Grants from national and provincial government usually do not have to be repaid but often come with the condition that they are to be used for specific purposes.
The Municipal Infrastructure Grant (MIG) is an example of a conditional grant that is given to municipalities with the specific condition that those funds are used for maintaining infrastructure, such as roads, pipes, and wastewater treatment plants. Unused funds are returned to the treasury and if the trend continues, the annual allocation is reduced.
Last year the auditor-general said KDM’s grant was not spent for its intended purposes in accordance with the applicable grant frameworks as required by section 17(1) of the Division of Revenue Act of South Africa (Dora).
This year KDM has been allocated R94.3 million in grants, which includes a MIG of R43 million.
The burning question for opposition councillors is why is KDM failing to spend the money it receives for capital projects?
Democratic Alliance (DA) caucus leader Madhun Sing said there appeared to be a shortage of skills necessary for project planning and implementation.
Sing told the Courier his party was calling for a skills audit on all levels of management.
“It is likely we have the wrong people in the wrong places, resulting in service delivery suffering. We cannot wait for months and in some cases, years, for complaints to be attended to. Roads are filled with potholes, street lights are not working in so many streets and refuse is just piling up. This municipality is showing signs it is dysfunctional. Urgent intervention and proper planning is required to turn the situation around.”
Inkatha Freedom Party councillor Moosa Motala said the consequences of capital underspending were severe.
“If repairs and maintenance of critical infrastructure are not maintained, more money will be needed in the long term for expensive emergency repairs and maintenance. Capital investments in infrastructure is critical because it stimulates the local economy and enables the roll-out of services in poor communities.”
In 2018, treasury demanded KDM return R18 million of unspent grants allocated for electricity upgrades and in 2017 unspent grant funding for electricity upgrades amounting to R10 million also had to be returned.
To compound its problems, ratepayer debt soared to R274.8 million in the first quarter – an increase of about 16% over the previous year.
The national lockdown has been blamed for a significant drop in ratepayers’ income.
