Capex: municipalities fail to spend

2010-03-11 00:00

KWAZULU-NATAL municipalities have failed to spend R10,7 billion in funds set aside for capital expenditure such as supply of bulk water and electricity, KwaZulu-Natal Finance MEC Ina Cronje disclosed in a report to the provincial legislature in KwaMaphumulo yesterday.

Tabling the first-quarter review of municipal budget performance for 2009/10, Cronje said poor capital expenditure planning by KZN municipalities has been cited as the root cause of underspending of the R10,7 billion capital budget allocated to municipalities in the 2009/10 financial year.

Cronje said most of the province’s municipalities did not meet the 25% benchmark and spent only 19,2% of the capital budget for the first quarter.Only eThekwini Metro and uMgungundlovu spent more, she added — 25,1% and 20,4%, respectively.

“With capital expenditure for the first quarter of 2009/10 mainly funded through grants and subsidies (50,5%) and internal contributions (44,7%), we are concerned that the municipal infrastructure grant tranches of the capital budget may be withheld if it remains unspent,” Cronje said.

The MEC encouraged municipalities to start planning for their expenditure even before the start of the financial year “as these need to be planned well in advance”.

“This slow start delays the delivery of infrastructure to provide basic services and exacerbates the current backlogs.

“It is imperative that municipalities adopt appropriate monitoring systems and take corrective steps where under­spending is recorded.

“Crucial to this process is the appointment of skilled technical staff,” Cronje said.

In addition, Cronje said, seven municipalities failed to report on capital spending. They are uMtshezi, uMsinga, eMadlangeni, ­eDumbe, Mandeni, Ingwe and Sisonke.

Turning to financial reporting by municipalities, she said the review indicates that most municipalities failed to report on critical aspects of their budgets.

“Not only do these municipalities deprive themselves of an opportunity to be assisted, but by failing to submit information, they also distort the overall picture of municipal finances.

Municipalities collected R8,1 bill­ion of a total operating revenue budget of R32,7 million during the course of this first quarter, the legislature was told.

It was also reported that 11 municipalities failed to generate any revenue from property rates at the end of the first quarter.

“While the provincial average revenue collection met the straight-line 25% benchmark, we are concerned about the slow collection of revenue at uMdoni (14,5%), uMuziwabantu (11,2%), Nqutu (1.6%), Amajuba (14%), Nongoma (1,6%), Mtubatuba (13%) and Ilembe district municipalities (12,9%).

Municipalities spent R6,8 billion (22,8%) of their total adopted budget of R29,8 billion. The total municipal debt at the end of the first quarter amounted to R8,2 billion and the government owes municipalities R329,3 million. However, this may not be accurate as some municipalities cannot establish which government department is liable for the debt.

Cronje said that unless financial management and fiscal governance in municipalities are improved, they cannot improve service delivery and spearhead development.

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