R120?mln in unspent grants returned

2013-09-13 00:00

A TOTAL of R120 million in unspent conditional grants allocated to KwaZulu-Natal municipalities was returned to the Treasury’s national revenue fund in the 2011/12 financial year.

The money is set to increase as an undisclosed number of KZN municipalities have in 2012/13 financial year again not spent their grant funds.

The national Treasury is now in the process of verifying and quantifying the unspent funds by individual municipalities.

The total amount will be known in November.

The committee also heard that R443 million had been returned to the national fiscus by KwaZulu-Natal municipalities in the past five financial years.

It also heard that the money taken by Treasury placed an enormous financial strain on the municipalities and also hindered the delivery of services.

Speaking at the committee meeting, Joey Krishnan, general manager for municipal finance in the Co-operative Governance and Traditional Affairs Department, said a total of 31 municipalities have not spent their conditional grants in 2011/12.

She said the main cause for the returning of the funds was due to poor reporting and accounting on their finances by the municipalities.

Another reason given for the returning of the funds was that some municipalities gave no explanation to the Treasury whether they had spent the money or not, and how, if the funds were committed, they planned spending them.

Another problem was that grants were transferred by national departments to municipalities in January, giving them little time to spend them before the financial year-end a few months later.

Krishnan said a process was underway in an attempt to resolve the matter with Treasury.

“It is a problem that places municipalities in financial distress. It is something we are dealing with,” Krishnan said.

The head of municipal finances in Treasury, Farhad Cassimjee, said the funds were taken from municipalities after due process.

“In many instances they have not submitted the required motivation and then when funds are stopped they start to cry out that national and provincial Treasury is not assisting them,” said Cassimjee.

But, Krishnan said there were instances where councils made submissions only for their conditional grants to be stopped regardless.

Committee members were concerned about action that should be taken against responsible officials.

“If you are sure funds are committed and there are concrete plans to spend the money, you can then make a case for the money to be rolled over,” committee chairperson Maggie Govender said.

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