The National Treasury’s decision to halt the Municipal Infrastructure Grants (MIG) of some of the North West municipalities was informed by the failure of the local authorities to provide answers for the unspent money.
Treasury says 13 municipalities were afforded an opportunity to provide reasons as to why they should be allocated grants, after failing to spend them in the previous financial year and nine of them failed to do so.
The nine municipalities are among those who have failed to render basic services like water and sanitation and are set to lose a whooping R460 million in grants collectively.
The municipalities in question include Ditsobotla, Ratlou, Mamusa, Rustenburg, JB Marks, City of Matlosana, Moses Kotane, Madibeng local municipalities, and the Dr Ruth Segomotsi Mompati district municipality.
Treasury’s Director for monitoring conditional grants in Municipalities, Sello Mashaba, said the Division of Revenue Act gives it the power to stop the allocation of grants for underperforming municipalities if it anticipates that the grants will be underspent.
“The following Division of Revenue Act, 2022 Act No.5 of 2022 (DoRA) process was followed. Section 18 of the Division of Revenue Act states that National Treasury may in its discretion or at the request of a transferring officer or the national department that is responsible for administering the affected conditional grant, or a receiving officer or municipality, stop the transfer of a Schedule 4 or 5 allocations or a portion thereof to a province or municipality.
“In addition, Section 18 also provides that the National Treasury can stop the allocation of an underperforming municipality using its own discretion. Both decisions of stopping on a request by the transferring officer or at the discretion of the National Treasury are considered if the National Treasury anticipates that a municipality shall substantially underspend on the allocation, or any program, partially or fully funded by the allocation, during the financial year.
“The same DoRA section 17 requires that before the National Treasury considers stopping a portion or the entire allocation, it should write to the affected municipalities and afford them an opportunity to make a written representation as to why their funds should not be stopped.
“The municipalities are afforded an opportunity to respond within 7 working days in line with section 38 of the Municipal Finance Management Act, (MFMA) and section 17 of DoRA. Based on the responses of the municipality, National Treasury would make the final decision to either stop or not stop the allocation.
“In terms of DoRA, the decision to stop or not stop the allocation is communicated through a gazette in accordance with section 18(4) of the 2022 DoRA.
“National Treasury has already published the gazette through Government Gazette No. 48327 of 29 March 2023. Therefore, and in terms of section 38 of MFMA, the affected MEC in a particular province is only informed then,” Mashaba said.
