South Africa

City of Joburg no longer getting developmental grant funds due to underperformance

City of Joburg grants

National Treasury has announced the halting of R1 billion worth of  funds allocated to several important projects at the City of Joburg municipality.

This decision, it said, comes as a result of concerns over underperformance and non-compliance with grant programmes aimed at urban development and public transport improvement.

Treasury, following mid-year expenditure reports, cited provisions from the 2023 Division of Revenue Act (DoRA) and the Municipal Finance Management Act (MFMA) for its decision.

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Interventions

These legislative frameworks empower the National Treasury to intervene when there are indications of substantial underspending or underperformance by municipalities.

Specifically, the funds were earmarked for:

  • The Programme and Project Preparation Support Grant (PPPSG),
  • Urban Settlement Development Grant (USDG),
  • Public Transport Network Grant (PTNG),
  • Informal Settlements Upgrading Partnership Grant (ISUPG), and
  • Neighbourhood Development Partnership Grant (NDPG).

Letter addressed to city manager

In a letter addressed to City Manager Floyd Brink, the City of Joburg was notified of Treasury’s intention to withhold portions of the allocated funds, with amounts ranging from millions to hundreds of millions of rands, depending on the grant.

However, National Treasury said this decision will not impact future allocations.

Treasury said that the City of Joburg has been asked to provide detailed explanations and justifications for their expenditure levels, project progress, financial liquidity, cash flow projections, and commitments to spending the allocated funds by the end of the financial year.

ALSO READ: Treasury’s R629 million grant reduction hits Tshwane

Additionally, Treasury has asked the City of Joburg to submit representations on any delayed projects, commitments made under supply chain management regulations, and an acceleration plan to meet the approved implementation plan for the current financial year.

Under the MFMA, the city is mandated to respond within seven days, providing written representations to Treasury regarding the proposed halting of the allocations.

A few days ago, Tshwane Mayor Cilliers Brink was informed by Treasury of its intention to stop the payment of conditional grants by R629 million.

It’s reason for doing this was also motivated by what it said was “underperformance/noncompliance”.