eThekwini says Treasury slashing grants worth millions 'beyond its control'

The eThekwini municipality has blamed “conditions beyond their control” for the loss of grants worth hundreds of millions of rand from the National Treasury.

This emerged during an executive committee meeting at the Durban City Hall on Tuesday.

The city had two grants worth millions slashed by the National Treasury, reportedly due to underspending in the first half of the year. 

In March, the city lost R100m for the Urban Settlements Development Grant (USDG) before losing another R122m for the Neighbourhood Development Grant.

At the meeting, deputy city manager Lihle Phewa presented the city’s current and projected spending of grants and provided updates on some of the projects they were spent on.

The DA's Thabani Mthethwa noted that Phewa had said only about 54% of the disaster grant had been spent by the city so far, which he found “worrying”.

“I would be very worried if the disaster grant spending was sitting at 54% because this money was given to the city sometime last year, and one would expect that, given all the disasters we’ve had, the city would jump at the opportunity,” he said.

Mthethwa also asked for a detailed explanation of what led to the city losing millions of grants from the Treasury.

Municipal manager Musa Mbhele said reports that the grants were slashed because the city had underspent in the previous financial year did not paint the whole picture.

He said the Treasury looked at the remaining time to spend the money and felt the need to cut the grant, despite their motivation to prove they would be able to spend all the money and having spent 100% of the grant over the past five years.

“At the time that they took the money we were the leaders in the expenditure of USDG. We were sitting at 61% or 66%, but we were among the best, with Buffalo City taking the lead by 1%. But they still took back that money,” he said.

“We tried to motivate and show the commitment that we have made to the community, but because they were doing those cuts across the metros, they did.”

Mbhele said another portion was taken from the public transport network grant after another failure to spend all of the funds allocated to them in time. He said that was beyond their control because they had been given a large amount of money with not enough time to use it.

“They didn't agree with us on the tactical adjustment of the approach to Go!Durban. I went there and met with the DG of the national department of transport and tried to motivate that the conditions on the ground demanded that we tactically adjust our approach. They didn't agree for a very long time, and when they finally agreed, we had lost about two or three months of expenditure,” said Mbhele.

“So at the end of the year when they realised we still had a large amount, they went on and made the cut for the very same money that they gave us late.”

He said another factor was the amalgamation of a partnership development grant with the Presidential Employment Program (PEP).

“The PEP gave us a large sum of money which was about R600m when we were left with a couple of months before the end of the financial year. We went there and motivated for a roll-over and they granted it, but then for one reason or the other when they looked at the combined amount, the money that had still not been spent was huge, and they cut it.

“Those are the three main grounds out of which they cut the grants: late transfers, the lumping of two grants into one, the issue of us having cuts despite being the leaders in the spending of USDG and having spent 100% of it in the last five years.”

Bhekithemba Mvubu, chair of the human settlements and infrastructure portfolio committee and EFF caucus leader in the city, believes cutting the grants is part of “politicking” by politicians at the Treasury.

“I will call it what it is: this is just politicking. Next year is a year of elections and we must never make the mistake of thinking that Treasury is apolitical. There are politicians there as well that tend to influence things to go in a particular direction,” said Mvubu.

“If you look at the trend, eThekwini had been spending all of those grants for the past five years. Now they go and present the programmes that they have in place to ensure that they are going to spend 100% of this grant and they still decide to take this grant away.”

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