Failing local governments lose R500m in grant aid

a breakdown in municipal service delivery has led the provincial and local government department to stop treasury fund allocations worth more than r500m to underperforming municipalities. private sector intervention has been mooted to help struggling municipalities become more efficient.


transfers under the municipal infrastructure grant worth r503,5m were withdrawn from 38 municipalities last month. the grant covers the capital cost of municipalities to provide basic services to the poor. while small municipalities in rural areas are the main underspenders, some metro municipalities are also affected.


transfers of r100m to metro municipalities were stopped, with r80m being withdrawn from nelson mandela municipality in eastern cape. ekurhuleni and the city of johannesburg also lost allocations.


in terms of a provincial breakdown, unspent grants worth r216m were withdrawn from eastern cape, limpopo lost r58,5m, free state had r56m taken away, mpumalanga r55,8m and gauteng lost r49,2m.


the withdrawals come amid renewed protests at some towns throughout the country over poor service delivery. underspending has continued despite attempts by the government to help a number of municipalities with their capacity building initiatives.

the government has planned for national infrastructure spending of r400bn over the next five years.


to help the delivery process, the government has made available various infrastructure grant programmes to municipalities, provincial governments, public entities and even private sector enterprises, with several government departments res-ponsible for the administration of the infrastructure grant programmes.


christo engelbrecht, manager of government growth initiatives at deloitte, said yesterday that municipalities were not solely to blame for the breakdown in services.

often poor communication from the government meant some municipalities were unaware of the availability of grants, or did not know which government departments to approach for the grants.


but a dire lack of capacity was also to blame, with municipalities often unable to deliver projects once funding had been allocated, he said.


“we do not believe that this funding is being put to the best possible use by the role players,” said engelbrecht. deloitte has proposed that an optimisation programme be implemented by local government authorities, with private sector intervention mooted to help underperforming municipalities manage their projects.

“government recently laun-ched project consolidate to address the underperformance of certain municipalities but it’s not clear whether this programme is delivering the desired outcomes,” he said. “the private sector can certainly play a role by helping municipalities with project delivery.”


engelbrecht said that an infrastructure grant optimisation programme to raise additional funding, which was aligned with a particular municipality’s integrated development plan and investment promotion strategies, could help municipalities address development needs.