Another Gauteng metro risks losing R600 million in funding

 ·19 Feb 2024

It has come to light that a third major Gauteng metropolitan, the City of Ekurhuleni, has been warned by the National Treasury that it risks losing R607 million due to underperformance and noncompliance of grant expenditures.

Last week, Ekurhuleni was amongst its provincial peers, Johannesburg and Tshwane, to have received letters from Treasury deputy director-general Malijeng Ngqaleni proposing to stop a portion of allocations of grants due to reported allocated expenditure sitting below 45% (Johannesburg and Ekurhuleni) and 40% (Tshwane).

The letters said that the Treasury intends to invoke a section of the Division of Revenue Act which allows for it to either fully or partially stop the transfer of the grant allocations to a municipality if it anticipates that the municipality would substantially underspend the funding.

The various grants are allocated for:

  • Project preparation;
  • Urban settlement development;
  • Upgrading of informal settlements;
  • Public transport;
  • Neighbourhood development. 

As such, the three metropolitans risk losing more than R2.4 billion:

  • Johannesburg risks forfeiting R1.2 billion;
  • Tshwane risks forfeiting R635 million;
  • Ekurhuleni risks forfeiting R607 million.

The EFF, which co-governs the Ekurhuleni metro and has its provincial chairperson Nkululeko Dungo holding the city’s finance portfolio, confirmed this in a letter.

“The City of Ekurhuleni cannot afford to return any of the funds to the National Treasury for any reason because our people are in desperate need of service delivery,” the party said.

It said that the city, along with other metropolitans, is “under serious strain due to the economic downturn” in collecting revenue and thus needs the grants. It added that expenditure “is going to improve to more than 95%”, pointing to “compliance with supply chain management policies” as the reason for the delay.

These Gauteng metros, governed at times by unstable coalitions, have been plagued by financial issues, adversely impacting service delivery.

Tshwane mayor Cilliers Brink said that the city “takes this risk very seriously” and “will give a full account of our situation to the National Treasury and outline plans to spend our full capital allocation.”

City of Johannesburg spokesperson Nthatisi Modingoane said that the city wants “to assure our residents that a majority of the allocated funds have already been committed and contractors are currently working on approved projects.”

Recently, Ekurhuleni has been having a stand-off with the auditor general over its audit outcome. Johannesburg announced that it would need to adjust its R80.9 billion budget downwards, whilst Tshwane’s debt to service delivery providers has ballooned as it attempts to get a grip on its financial woes by tapping into the over R23.3 billion owed.

Read: Joburg and Tshwane face massive funding cuts

Show comments
Subscribe to our daily newsletter