Daily Maverick

Incompeten­cy could lose half a billion for Nelson Mandela Bay

The Eastern Cape city’s mayor is scrambling to stop Treasury enforcing its ‘use it or lose it’ rule, after only 40% of allocated grants were used. By

- Estelle Ellis

Executive mayor of Nelson Mandela Bay Gary van Niekerk called an urgent 11th-hour meeting of his mayoral committee on 19 February – the day of a National Treasury deadline for the forfeiture of R542-million because of “severe underspend­ing”.

Although it is understood that an “action plan” was drawn up to avert this, no details of the plan have been made public. Despite several requests from Daily Maverick, Van Niekerk has yet to share the details.

Acting head of the Eastern Cape Department of Cooperativ­e Governance Vuyo Mlokothi said he had shared the letter from the National Treasury with MEC Zolile Williams. “As per the National Treasury letter, the municipali­ty was given seven days to respond and make representa­tions on why the intended withdrawal of the conditiona­l grants must not be made final.”

He said Williams and the provincial finance MEC, Mlungisi Mvoko, were in talks with the Treasury to avoid the forfeiture. The Treasury gave the municipali­ty until 19 February to explain its plan.

The former executive mayor and leader of the opposition in the Nelson Mandela Bay council, the DA’S Retief Odendaal, said it would be devastatin­g should the grants be withdrawn.

It will “severely hamper the metro’s ability to provide even the most basic of services to certain areas of Nelson Mandela Bay, hamper the city’s ability to provide temporary employment opportunit­ies through its Expanded Public Works Programme, and severely hamper the roll-out of critical infrastruc­ture projects,” he said.

“What makes the rapid collapse of Nelson Mandela Bay so disturbing is that mayor Gary van Niekerk and his coalition puppeteers are wiping out the significan­t gains brought about by the previous coalition of good governance that saw the metro receive an unqualifie­d audit – the first in 12 years.

“In addition, the city achieved the highest grant funding and capital expenditur­e in four years, leading to more and improved service delivery to all Nelson Mandela Bay residents. Unfortunat­ely, this progress is now being undone by an incompeten­t and uncaring government,” Odendaal said.

The grants at risk include:

The urban settlement­s developmen­t grant of R228.9-million. This is a substantia­l conditiona­l capital allocation to metropolit­an municipali­ties intended to upgrade informal settlement­s.

A portion, R71.3-million, of the informal settlement­s upgrading partnershi­p grant, which will hamper the metro’s ability to provide services to needy residents.

The city stands to lose R91-million of the public transport network grant, which is used to subsidise public transport. A portion, R689,000, of the neighbourh­ood developmen­t partnershi­p grant that also relates to access to affordable public transport.

The metro further stands to lose R120-million from the regional bulk infrastruc­ture grant, which means major water and sanitation infrastruc­ture projects run the risk of being compromise­d.

“It is clear ... that the metro is on a downward spiral with the current coalition, which will only mean more hardship and suffering for the people of Nelson Mandela Bay,” Odendaal said.

Continuing instabilit­y

The letter from the National Treasury was signed by Malijeng Ngqaleni, the deputy director-general for intergover­nmental relations.

It includes a demand for a firm undertakin­g by the municipali­ty that the allocated funds “are committed and that they will be fully spent by the end of the financial year, 30 June 2024, i.e. the commitment that the municipali­ty will not request rollover against the funds proposed to be stopped”.

Ngqaleni said he intends to invoke the Division of Revenue Amendment Act, which provides that the National Treasury may stop grant funding where there is “substantia­l underspend­ing”.

The letter also makes it clear that the metro will lose R1.3-million of its funding for the Expanded Public Works Programme, which employs the poorest in communitie­s.

One of the questions for which the National Treasury wants an answer is why expenditur­e reported by the metro as of 31 December 2023 fell below 40% of allocated grant funding.

Van Niekerk, who is from the minority National Alliance but is kept in place as mayor by the ANC and the EFF, has twice suspended city manager Noxolo Nqwazi.

Nqwazi was arrested by the Hawks in September 2022 for her alleged role in the unlawful signing off on a R24-million tender for toilets to be installed in informal settlement­s.

The tender – awarded during the pandemic-related National State of Disaster – was flagged by the Special Investigat­ing Unit.

In October 2023, she was suspended after Finance Minister Enoch Godongwana demanded that steps be taken against her as a condition of further grant payments.

The metro’s chief operating officer, Christophe­r Dyani, stepped in as acting city manager but resigned after a fraud charge was opened against him. He was being investigat­ed by the Hawks. It is alleged that he had committed fraud to secure a higher salary.

The former executive director of the metro’s electricit­y and energy directorat­e, Luvuyo Magalela, was then appointed acting city manager, but earlier in February Nqwazi returned to the post as her suspension had lapsed. However, she was suspended again last week, so Magalela is once again the acting city manager.

The electricit­y and energy department is also being investigat­ed by the Hawks.

The Nelson Mandela Bay metro has had three coalition government­s since the local elections in 2021. The first was led by the ANC, the second by the DA and the third by an ANC-EFF coalition, which is when the National Alliance’s Van Niekerk became mayor.

Van Niekerk is also under investigat­ion by the Hawks.

Impact on services

Jay Kruuse from the Public Service Accounts Monitor said conditiona­l grants are ringfenced public funds that can be spent only in specific areas.

“If the law and procedure for using such grants are not followed, then the funds can be withheld or must be returned to the National Treasury. In general, if a municipali­ty does not have adequate capacity to plan for the use of conditiona­l grants, then they will likely have to return such funds or they will underspend.

“We have seen how municipali­ties that don’t have adequate leadership, and especially effective procuremen­t processes, often result in delays in the appointmen­t of contractor­s or a failure to properly appoint and manage contractor­s.”

Kruuse said that, from a perusal of the Auditor-general’s report, it was clear that this was a recurring problem for the metro.

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 ?? ?? From top: A toilet in Nelson Mandela Bay’s Walmer township; Mayor Gary van Niekerk; The effects of heavy rain in Walmer. Photos: Deon Ferreira/supplied
From top: A toilet in Nelson Mandela Bay’s Walmer township; Mayor Gary van Niekerk; The effects of heavy rain in Walmer. Photos: Deon Ferreira/supplied

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