President Jacob Zuma denied on Thursday that his home town had been unfairly advantaged with R1 billion in taxpayers' funds for the Nkandla Mlalazi Smart Growth Centre.

Responding to question in the National Assembly, Zuma said he saw no reason why Nkandla should be "punished" because he happened to come from there.

"Should they be punished because they are neighbours to Zuma? I don't think that is the correct approach," he said.

"Developing that area does not trouble me, it makes me very proud."

Democratic Alliance parliamentary leader Lindiwe Mazibuko asked how the president could justify spending money in an area "just 3.2km from your homestead" when other impoverished parts of KwaZulu-Natal were left without basic services.

She said within a 100km radius, villages like Ebizimali and Eqhudeni lacked water and electricity.

Zuma responded by naming 23 poor districts nationwide which had been identified by government as recipients of upliftment programmes.

"Development goes where it goes at a given time," he said.

He denied he had instructed government to give priority to the development project, which would give rise to a new town, dubbed "Zumaville" in media reports.

The project is expected to cost R2 billion, with half of the funding coming from the state.

It will reportedly include a school, libraries, a sport centre with tennis courts, housing, and communal gardens and is linked to a rural development organisation Zuma chairs.

The rapid state-sponsored development has resulted in the president being accused of putting his interests, and those of his family, above those of other poor communities.

The ANC Youth League has called it "a case of selective development".