Eastern Cape rural municipalities return R2.2bn in unspent grants to Treasury over five years

Eastern Cape’s rural municipalities have returned R2.2-billion in unspent grants to National Treasury since 2019, while communities have borne the brunt of crumbling roads, water systems and electrical infrastructure.

The number was made public by MEC for cooperative governance Zolile Williams in the province’s legislature on Thursday, in response to a question from the Democratic Alliance. The figure excludes funding returned by the province’s two metros and does not include unspent grants for the current financial year, which will be finalised only at the end of March.

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However, the current spending of municipalities on the Municipal Infrastructure Grant, the Regional Bulk Infrastructure Grant and the Electrification Programme spell disaster for the province as its rural municipalities have, with just three weeks left in the financial year, only spent between 17% and 61% of these grants.

In Nelson Mandela Bay alone, the grants at risk total R542-million because funds allocated for crucial infrastructure projects have not been spent.

“The result of this underspending is that hundreds of thousands of people are being forced to live with sewage in their streets, taps with no water and no electricity supply to their homes because the people who have been placed in charge are incapable of spending the money they have been given,” said the DA’s Vicky Knoetze.

“Critical infrastructure projects ranging from water augmentation to electrification and bulk infrastructure upgrades have fallen because of maladministration and incompetence.”  

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The answer provided by Williams also showed that underspending of grants in rural municipalities quadrupled between 2020 and 2021, doubled again in 2022 and is still increasing.

Between the 2019/20 and 2022/23 financial years, R1.147-billion of the Municipal Infrastructure Grant allocation, R176.2-million of the Integrated National Electrification Programme allocation, R315.2-million of the Water Services Infrastructure Grant allocation and R553-million of the Regional Bulk Infrastructure Grant allocation was returned.

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Underspending by rural municipalities in the 2019/20 financial year of the Municipal Infrastructure Grant totalled R62.6-million. This ballooned to R252.3-million a year later and shot up to R400.3-million the following year.

Williams said his department had developed a risk-adjusted strategy to “arrest perpetual grant [under]spending”.

At a Thursday meeting with the province’s mayors, he said that the negative messaging around local government had to end. He said their plans were working and cited the example of OR Tambo District Municipality, which managed to spend 60% of its grants.

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Williams said the risk-adjusted strategy was introduced in March 2023 and had already seen an increase in midyear performance from 37% to 61% of grants spent.

He said they were providing support to boost the implementation of projects. DM