The Select Committee on Appropriations yesterday heard that Municipal Infrastructure Grant (MIG) spending remains a challenge in many municipalities.
While a total of R15.9 billion in MIG allocations were transferred to municipalities between July 2017 and March 2018, the Department of Cooperative Governance and Traditional Affairs (Cogta) has since evoked Section 18 of the Division of Revenue Act to a large number of municipalities that did not meet the expenditure requirements or comply with the provisions of the act.
Cogta indicated that it withheld R1.5 billion of MIG funding until municipal performance improved with regard to expenditure, reporting and commitment levels, for a period not exceeding 30 days. As at end of March 2018, MIG funding to 56 municipalities totalling R669 million was stopped and reallocated to 53 municipalities, despite the support and intervention measures municipalities received. Cogta committed to provide the committee with a comprehensive list of municipalities that have lost MIG funds.
The committee was told that rollover requests received for 2016/17 total R660 million, but only R420 million was approved by National Treasury. The committee also heard that 95 percent of municipalities that have unspent conditional grant funds failed to return these funds to the National Revenue Fund. Unspent grant funding that has not been returned to treasury is recouped by offsetting the amount against the equitable share, of which R1.4 billion was cut from the 2016/17 equitable share. Treasury indicated that municipalities are allowed to make payment arrangements, but the majority of them fail to do this. The committee raised its concern with the effects of this on service delivery.
The Financial and Fiscal Commission (FFC) told the committee that 60 percent of district municipalities are dysfunctional on revenue management, procurement processes, asset management and because they prioritise spending on new assets instead of maintaining existing assets.
The Chairperson of the committee, Mr Charel De Beer, said: “Intervention must be coordinated and the early warning system, as mentioned by the South African Local Government Association, becomes a necessary mechanism to ensure early intervention.”
The committee, while noting the improvements and efforts made by a number of municipalities, said that Cogta along with National Treasury needs to devise a plan on how to effectively intervene where municipalities fail to spend the allocated funds.
The Select Committee on Appropriations yesterday held a workshop on the back-to-basics programme to discuss the effectiveness of the support provided to municipalities, as well as the expenditure and performance information on the MIG.
ISSUED BY PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE ACTING CHAIRPERSON OF THE SELECT COMMITTEE ON APPROPRIATIONS, MR CHAREL DE BEER
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