Budget 2021

Municipalities that don't spend government grants could lose out

0:00
play article
Subscribers can listen to this article
Finance Minister Tito Mboweni (Gallo Images, Brenton Geach)
Finance Minister Tito Mboweni (Gallo Images, Brenton Geach)
Finance Minister Tito Mboweni (Gallo Images, Brent
  • In March 2020, the National Treasury stopped grants to 47 municipalities. 
  • Provinces or municipalities that do not spend their allocated grants from national government or comply with grant conditions, could find fund transfers withheld or relocated to another recipient. 
  • Metros around the country had urban settlements development grants reduced significantly last year.

Municipalities could face further financial pressure after National Treasury warned of changes in conditional grants.

The latest Budget Review, issued following Finance Minister Tito Mboweni's Budget speech, notes that provinces or municipalities not spending their allocated grants from national government - or not complying with grant conditions - could find the fund transfers withheld or allocated elsewhere.

Treasury said the aim was to improve coordination between national, provincial and local government, and to strengthen accountability and service delivery.

Carrot and stick

Speaking during a press briefing after the Budget, National Treasury deputy director general for intergovernmental relations, Malijeng Ngqaleni, said: "Where we can intervene in terms of stopping conditional grants to non-performing or underperforming municipalities, we make progress by reallocating those resources to municipalities that are making progress in terms of service delivery.

"It is a carrot-and-stick approach to improving standards at a local government level."

In the 2019/20 year, Treasury withheld six conditional grants from four provinces, pending the resolution of outstanding problems, and stopped one conditional grant, which was then reallocated to another province.

In March 2020, the Treasury stopped grants to 47 municipalities for the same reasons.

According to Mboweni, funds are being reallocated to municipalities that have fast-tracked projects and shown that they are spending their allocations.

In February 2020, Treasury placed Nelson Mandela Bay Municipality under intervention due to persistent non-compliance and mismanagement of funds, and transfers have been suspended.

"The National Treasury will stop all transfers to the municipality until its finances have been stabilised.

"The provincial treasury and department of cooperative governance are managing this intervention," reads the Budget Review.

Upgrade for informal settlements

Meanwhile, for the 2021/22, a standalone informal settlement upgrading grant for provinces and municipalities will be introduced, drawn from funds previously within the human settlements development grant and the urban settlements development grant for provinces and municipalities.

The Review stressed that these grants "remain crucial components for municipalities to deliver basic services such as housing and the upgrading of informal settlements".

Metros around the country had urban settlements development grants reduced significantly last year. Mangaung had a 37% reduction, while the City of Ekurhuleni received a 6% cut and the City of Tshwane, 20%.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
USD/ZAR
14.61
(0.0)
GBP/ZAR
20.02
(0.0)
EUR/ZAR
17.37
(0.0)
AUD/ZAR
11.13
(0.0)
JPY/ZAR
0.13
(0.0)
Gold
1,743.98
(0.0)
Silver
25.25
(0.0)
Platinum
1,204.50
(0.0)
Brent Crude
62.95
(-0.4)
Palladium
2,641.93
(0.0)
All Share
67,191
(+0.2)
Top 40
61,459
(+0.3)
Financial 15
12,123
(+0.8)
Industrial 25
87,544
(+0.1)
Resource 10
68,608
(+0.2)
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1240 votes
No, I did not.
52% - 3099 votes
My landlord refused
28% - 1671 votes
Vote