The Tshwane metro is staring at the possibility of forfeiting over R629-million of its grant funding from the National Treasury due to underperformance of the grant allocations.
The Capital City has been given until February 16, to motivate why the funds should remain in its coffers and not revert to the national fiscus.
The metro recently implemented a financial rescue plan to reduce expenditure by R1-billion per month for the next six months.
The grants on the line include:
– Programme and project preparation support grant,
– Urban settlement development grant,
– Public transport network grant,
– Informal settlements upgrading partnership grant and,
– Neighbourhood development partnership grant.
Deputy director-general for intergovernmental relations at the Treasury, Malijeng Ngqaleni recently wrote to Tshwane city manager Johann Mettler about the failure to use the funding to promote economic development and raise the standard of living of the residents.
The Treasury this week invited Tshwane to explain why the grants should not be rescinded in terms of Section 18 of the 2023 DoRA and Section 38 of the Municipal Finance Management Act (MFMA).
According to the Treasury the DoRA (Division of Revenue Act) provides that it may, at its discretion, stop the transfer of a Schedule 4B or 5B allocation to a municipality if it anticipates that such municipality shall substantially underspend on any programme, partially or fully funded by the allocation.
The Treasury hereby informs the metro of the intention to stop:
– R14.4-million from the preparation allocation of R62-million
– R391.4-million from urban settlement of R978.5-million
– R85-million from public transport allocation of R830.3-million
– R102.8-million from settlements upgrading allocation of R619.8 million, and
– R36-million from neighbourhood development allocation of R155.4-million
Ngqaleni demanded to know why expenditure as of December 31 is below 40%.
The Tshwane metro must submit a:
– progress report on the approved projects, including their names;
– representation of the cash coverage for grants transferred (Liquidity ratio);
– representation of the initial cash flow projections against actual performance;
– progress report on any approved rollovers from the 2022/23 financial year;
– representation on all projects awarded after the second quarter of the municipal financial year as of December 31, 2023;
– report on any commitments made against Supply Chain Management Regulation 32 projects and their progress;
– declaration of the amount that the Treasury should stop; and
– an accelerated 2023/24 approved implementation plan.
He demands a commitment that the allocated funds will be fully spent by June 30, meaning the municipality will not ask for funding to roll over.
That’s not what the letter says. Like other municipalities ,Tshwane has to account to National Treasury on the unspent portion of our grants. At risk is a significant portion of these grants, but not the full allocation. We will respond in detail, and fight, if necessary.
— Cilliers Brink (@CilliersB) February 13, 2024
Tshwane mayor Cilliers Brink said that a decision had not been made to revoke funding.
“No decision has been made to take away Tshwane’s grant funding. National Treasury is asking the city to give an account of the unspent portion and to motivate why a portion of the grants shouldn’t be forfeited,” Brink said.
“The fact that this letter was leaked shows bad faith. The risk is that the national government is trying to scrape together all the money it can get, even if it means defunding capital programmes in municipalities.”
We have until Friday to respond to National Treasury. The fact that this letter was leaked clearly shows bad faith. The risk is of course that National Govt is trying to scrape together all the money it can get, even if it means defunding capital programmes in municipalities.
— Mayor Cilliers Brink (@tshwane_mayor) February 13, 2024
Mayoral spokesperson Sipho Stuurman confirmed that the Treasury was hounding Tshwane to account for the unspent funds of approximately R629.6-million.
“We take this risk very seriously as we know that the national government is in a similar position as Tshwane.”
He alleged that the national government was in financial trouble and looking to claw back money from municipalities ahead of the Finance Minister’s budget speech.
“We will give a full account of our situation to the Treasury and outline plans to spend our full capital allocation.
We know that spending our full capital budget is essential to improving infrastructure for service delivery, especially to the poor,” Stuurman concluded.
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