TITO CRACKS THE WHIP
Allocations for poor-performing municipalities slashed
MUNICIPALITIES across the country – including three which invested in the doomed VBS Mutual Bank – will lose their share of nearly R3.7 billion to improve infrastructure after the National Treasury found they had no capacity to spend it.
Finance Minister Tito Mboweni has stopped the transfer of allocations of billions of rand to poorly performing municipalities that are underspending in the Eastern, Northern Cape, Free State and North West.
The billions were allocated as part of the municipal infrastructure grant, which aims to eradicate infrastructure backlogs in poor communities to ensure the provision of basic services such as water, sanitation, roads and community lighting.
According to Mboweni’s notice issued last Wednesday, the decision was taken after consultation with the Department of Co-operative Governance and Traditional Affairs (Cogta).
“National Treasury, in consultation with Cogta, concluded that municipalities reflecting significant uncommitted underspending would have their funds stopped within four provinces,” said the notice.
Mboweni said the money would be re-allocated to the district municipalities of the 94 local municipalities.
The affected local municipalities include 32 in the Eastern Cape and another 26 in the Northern Cape, while North West and the Free State both have 18. The list includes Madibeng, which invested R31 million of its conditional grants with VBS Bank.
In total, Mahikeng deposited R83m in VBS, including R23m from its municipal infrastructure grant, R60m of its equitable share.
The Moretele local municipality invested R50m from its water services infrastructure grant.
The Dr Ruth Segomotsi Mompati district municipality invested R150m, of which R100m was from its regional infrastructure grant and R25m each from the equitable share for free basic services and its building fund.
The illegal VBS deposits made by the municipalities cost four mayors their jobs this week after they were recalled by the ANC in North West.
In terms of Mboweni’s notice, the Dr Ruth Segomotsi Mompati district municipality will double its municipal infrastructure grant allocation from over R135.3m to almost R271m after the stopping of allocations to five local municipalities within its borders.
As well as stopping the R3.68bn, Mboweni has also halted R27.4m initially allocated to the Msunduzi local municipality in Pietermaritzburg and redirected it to the troubled West Rand district municipality, which will receive R20m, while the Matlosana local municipality will get R7.4m. West Rand was placed under administration last month after workers went on an indefinite strike over the municipality’s failure to make third party payments such as medical aid, pension funds, the Unemployment Insurance Fund and funeral policies. It also deposited over R77m with VBS.
The money forfeited by Msunduzi was meant to fund neighbourhood development projects to improve the quality of life of residents in the targeted areas, especially townships, after the municipality admitted it expected underspending due to challenges it was experiencing in implementing projects.
Mboweni has undertaken that the municipalities whose allocations have been stopped will continue receiving support from the Treasury, Cogta and relevant stakeholders on the municipal infrastructure grant cost reimbursement and invoice verification.
The SA Municipal Workers’ Union in North West told Independent Media that most of the province’s municipalities were unable to keep up with third party payments for their employees. Provincial secretary Vincent Diphoko said many of the municipalities were behind by up to eight months.
He said the ANC’s decision to axe seven mayors this week was not enough as mayors and municipal managers,who are accounting officers, were equally responsible.
He added the ANC should act on poorly run municipalities whether or not there are elections next year.
Finance Minister Tito Mboweni