THE City of Johannesburg has become the second Gauteng metro that stands to lose its developmental grant because of poor expenditure.
The National Treasury has notified the city that it plans to cut the metro’s conditional grants by just over R1bn.
Treasury deputy director-general Malijeng Ngqaleni has written to the city and proposed that a portion of the 2023/24 allocation to the city in respect of the programme and project preparation support grant (PPPSG) and urban settlement development grant (USDG) be stopped. The Treasury said this move was as a result of the city’s poor expenditure on the grants.
Other grants that would be affected include the public transport network grant (PTNG), informal settlement upgrading partnership grant (ISUPG) as well as neighbourhood development partnership grant (NDPG).
City manager Floyd Brink confirmed he received the letter dated February 12 but referred media queries to City spokesperson Nthatisi Modingoane, who said he would revert with a response but had not done so by the time of publishing.
In the letter, Ngqaleni said: “Acting on the above, the National Treasury informs you of the intention to stop an amount of R4m from your 2023/24 PPPSG allocation of R55m, R614.1m from your 2023/24 USDG allocation of R1.5bn, R400m from your 2023/24 PTNG allocation of R1.2bn, to stop an amount of R117,2m from your 2023/24 ISUPG allocation of R715m, and to stop an amount of R17,7m from your 2023/24 NDPG allocation of R134,7 in terms of section 18 of the 2023 DoRA [Division of Revenue Act]. This decision will not in any way affect future allocations to your municipality.”
The city was asked to motivate to the Treasury why expenditure which was reported on December 31 last year was below 45%. The Treasury has given the city seven days to provide reasons why it should not halt payments for the grants as a result of underperformance/noncompliance with the Act.
In addition, Treasury also wants to get the progress report against approved projects, representations on the cash coverage for grants transferred, and representation on the initial cash flow projections against actual performance, among other things.
Treasury has given the city seven days to provide reasons why it should not halt payments for the grants as a result of underperformance/noncompliance with section 18 of the Division of Revenue Act.
Joburg is the second metro to be served with a similar letter by Ngqaleni after Tshwane also received theirs this week Tshwane faces the possibility of losing about R629m in developmental grants funding.
Ngqaleni asked Tshwane to also motivate why the expenditure that was reported on December 31, 2023, was below 40%.
The two metros in Gauteng are governed through coalitions after the 2021 municipal elections failed to produce a clear winner and both have recently been experiencing poor revenue collection from businesses and households.
