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National Treasury Raises Alarm Over Poor Municipal Infrastructure Spending

by Central News Reporter
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National Treasury

JOHANNESBURG – The National Treasury has rung the alarm bells over municipalities’ sluggish expenditure on infrastructure grants in the second quarter of the 2023/24 fiscal year, pinpointing potential repercussions for community service delivery.

The treasury’s unease was palpable in a statement released this week. “The performance of the infrastructure grants to municipalities during the second quarter was not satisfactory. Low expenditure on infrastructure grants is a source of concern because this slow performance may eventually lead to unspent conditional grants that have to revert to the National Revenue Fund (NRF),” expressed the Treasury on Monday.

The implications of returning unspent grants to the NRF could hinder much-needed advancements, thereby impacting South African communities. “The surrendering of unspent conditional grants to the NRF has negative consequences to the communities that must receive the services linked to the infrastructure to be built,” the Treasury deplored.

According to the disclosed financial update, the Municipal Infrastructure Grant (MIG) emerged as the most efficient performer among direct infrastructure grants to municipalities in the second quarter, boasting a 49.3% performance – an optimist contrast to the preceding year’s 37.6% over the same spell.

In a close second came the Integrated Urban Development Grant Water (IUDG) with a 46.7% execution rate. “The MIG grant has been the highest performing grant for the third consecutive time as at the end of the second quarter year-on-year,” the Treasury elaborated.

However, the treasury’s local government revenue and expenditure report also spotlighted some areas fraught with slack implementation; the Municipal Disaster Recovery Grant (MDRG) recorded a mere 12.7% utilisation. The Public Transport Network Grant (PTNG) fared not much better, managing only a 25% execution. “It should be noted that the PTNG is an infrastructure grant allocated to metropolitan municipalities only and it is an observation that metropolitan municipalities are increasingly struggling to implement this programme,” told the Treasury.

The state of municipal consumer debts remained a significant concern as they totalled a daunting R338.2 billion by 31 December 2023. The report noted that a large portion of this is attributed to household debt, which signifies a considerable chunk of the financial burden on local governance.

Furthermore, the collection rates review revealed a stark disparity between projected and actual revenue, with a distressing 58.4% aggregate actual collection performance against a budgeted 75.6%. “The underperformance of actual collections against billed revenue holds a significant risk for the liquidity position of most municipalities as the planned expenditure is based on a higher performance level,” the Treasury cautioned.

As financial prudence and transparency become increasingly exigent, the Treasury affirmed its dedication to enhancing the credibility of municipal financial reporting. “Improving the credibility of the data strings is a priority for national and provincial treasuries and the submitted data strings are analysed monthly and errors are communicated to municipalities for correction,” the Treasury committed.

More insights to the financial integrity of South Africa’s municipalities can be gleaned from the complete report, accessible through National Treasury’s official portal, www.treasury.gov.za, in adherence to principles of transparency stipulated in the MFMA and the DoRA.


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