Urban Settlement Development Grant poor performance by Ethekwini & Mangaung

Human Settlements, Water and Sanitation

05 March 2019
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

According to eThekwini Municipality, the purpose of the Urban Settlement Development Grant (USDG) flows from the spatial framework of the municipality. This grant subsidises the annual revenue and the expected output of receiving the USDG is to see an improvement in the infrastructure and services within the City, and also to expand the City. The acquisition of land and breaking down of socio economic barriers has been made easier since the receiving of the grant. The grant has also led to the development of new transport systems.

During this financial year, 41% of the funds were used. The Municipality had an original plan this year for the way in which they planned on spending the money from the grant; however, they were not able to stick to this plan. During the readjustment of the budget, the municipality has had a look at their financial plan, and have tried to balance the spending of funds.

Initially, 52% of the USDG was allocated to informal settlements. After the readjustment process, 69% of the USDG has now been allocated to informal settlements.

Members said that the increase in the percentage of the budget spent by the municipality is commendable; however there was consensus that information had been left out and it took away from the credibility of the presentation. Members felt the presentation lacked a clear plan on how the municipality plans on using the rest of budget, and how they plan on getting the percentage of the budget use to 100%.

The USDG is the main source of funding for the Mangaung Municipality for their capital budget, followed by public transport. The municipality has had to re look at their business plan due to the declining of their roll over application because they needed to refrain from having incomplete projects. With the revised plans, most the number of projects in human settlements were increased, but the budget still remained the same.

The target for January in terms of expenditure was R441 million and the actual expenditure at the end of January was R230 million. The reason why the expenditure was so low was because of the poor planning of projects. Contractors have not been paid on time and to an extent this leads to delays on the ground, and stops projects from being completed.

The technical team had to look at how to improve performance and in the recovery plan, they needed to prioritise and implement USDG invoices; they have had to work with National treasury to ensure that additional grants from last year gets approved. The municipality needs to fully implement their credit control and debt collection procedures to recover debts. These are some of the things which they have had to deal with.

The Chairperson pointed out that it was very clear that the Committee was not happy with the lack of inter-governmental communication, and the poor presentation which was lacking so much information which was relevant for the discussion. The municipality has not come to the Committee being adequately prepared; rather, they came with excuses and challenges, without making any suggestions or having any interventions.

Mangaung Metropolitan Municipality was told to come back the following week better prepared to answer the questions posed to them, and that they come with a better presentation and recovery plan.

Meeting report

eThekwini Municipality

Ms Beryl Mphakathi, Head: Human Settlements Unit, eThekwini Municipality, presented the performance report to the Committee.

The purpose of the Urban Settlement Development Grant (USDG) flows from the spatial framework of the municipality. This grant subsidises the annual revenue and the expected output of receiving the USDG is to see an improvement in the infrastructure and services within the City, and also to expand the City. The acquisition of land and breaking down of socio-economic barriers has been made easier since the receiving of the grant. The grant has also led to the development of new transport systems.

Ms Xoliswa Hlongwane Head: Expenditure, eThekwini Municipality, took the Committee through the expenditure and numerical figures that were in the performance plan.

During this financial year, 41% of the funds were used. The municipality had an original plan this year for the way in which they planned on spending the money from the grant; however, they were not able to stick to this plan. During the readjustment of the budget, the municipality has had a look at their financial plan, and have tried to balance the spending of funds.

Initially, 52% of the USDG was allocated to informal settlements. After the readjustment process, 69% of the USDG has now been allocated to informal settlements.

Ms Mphakathi spoke on the non-financial performance of the municipality. In terms of the medium term strategic framework (MTSF), the City is expected to formally upgrade housing and water allocation services. They are delivering basic water and sanitation cervices through communal ablution programmes. They are also checking the on the delivery of title deeds.

In terms of the land that the Municipality has targeted for this current financial year, they had acquired up to 200 acres of land. They have achieved their targets where informal settlements are concerned. The municipality has reviewed and reduced some of their MTSF targets during the middle of the year due to some of the difficulties that they have been facing.

Discussion

Mr L Khoarai (ANC) said that what he did not get from the presentation was a clear enough explanation on title deeds. He also wanted to know whether the municipality has been experiencing any issues with paying suppliers within 30 days, given the difficulties they mentioned.

Mr M Wolmarans (ANC) thanked the province and the municipality for the presentation. His comments pertained to the percentage of the budget that used. This growth in the percentage of the budget used was consistent with what the Committee had told them to work on and be mindful of.

Mr M Malatsi (DA) said that the increase in the percentage of the budget spent by the municipality is commendable because what it shows is that they are on their way to where they usually are. However, he said that he felt that some key information had been left out, and he felt that this takes away from the credibility of the presentation. The information which was missing was a clear plan on how the municipality plans on using the rest of budget, and how they plan on getting the percentage of the budget use to be 100%.

Ms F Nkadimeng (ANC) wanted to check whether the municipality used the services of the housing Development Agency (HDA). She shared the sentiment that key information was missing and it impacted the credibility of the presentation. She also wanted to know why there had been such a drastic improvement in the percentage of the budget that was used, going from 15% in the second quarter to 41% in the third.

The Chairperson said that recently, the municipality was in the news about the illegal occupation of land, and wanted and explanation on how they have dealt with this issue since then.

Ms Mphakathi said that with regards to payments of suppliers, she can safely say that within 30 days, more than 80% of the suppliers are paid. In terms of how to move from the 41% to 100% use of the budget, the municipality plans on placing more focus on certain important projects to make sure everything on the ground is moving smoothly. The challenges which affect them are not only unique to the USDG; the municipality is operating in an environment that is constantly changing, and this is very challenging because with these changes come the need for different sorts of skills. The municipality is constantly trying their best to keep tabs on these changes. There is a backlog of just fewer than 70 000 title deeds on the City and there is an intervention which is currently in place

Mangaung Municipality

Mr Nthimotse Mokhesi, HOD: Free State Department of Human Settlements, said that in terms of expenditure, a lot has been done; however they feel that they have been putting emphasis on more working progress as they believe they can have better outcomes which are a more accurate representation of the amount of money they have spent. They currently have four projects nearing completion, R26 million has been spent on these and almost all of them are at the end of completion, however they have not been able to report on all of them. This was the reason for the skewness in the results.

Adv Jupiter Phaladi, Head: Directorate of Human Settlements, Mangaung Metropolitan Municipality took the Committee through the presentation.

The USDG is the main source of funding for the municipality for their capital budget, followed by public transport. The municipality has had to re look at their business plan due to the declining of their roll over application because they needed to refrain from having incomplete projects. With the revised plans, most the number of projects in human settlements were increased, but the budget still remained the same.

The number of water and sanitation projects stayed the same but they have had to increase their budget because there were some of the projects from the previous financial year which still needed to be completed.

The target for January in terms of expenditure was R441 million and the actual expenditure at the end of January was R230 million. The reason why the expenditure was so low was because of the poor planning of projects. Contractors have not been paid on time and to an extent this leads to delays on the ground, and stops projects from being completed.

The technical team had to look at how to improve performance and in the recovery plan, they needed to prioritize and implement USDG invoices; they have had to work with National Treasury to ensure that additional grants from last year gets approved. The municipality needs to fully implement their credit control and debt collection procedures to recover debts. These are some of the things which they have had to deal with.

Discussion

Mr Wolmarans said that when one looks at the targets per month, from September, you already see a pattern of missing targets. He asked ton this trend and why nothing has been done about it. His biggest worry is that the programmes mentioned will remained incomplete as the financial year comes to a close.

Ms N Hlonyana (EFF) asked about the recovery plan and the poor planning as being one of the biggest challenges, she wanted to know more about the technical team. She proposed that someone should be stationed at the office of the DG so that they can assist them and hold lines of communication between the Committee and the municipality.

Mr Khoarai just wanted clarity on the incomplete projects and inquired about when they would be complete.

Mr Malatsi said that the frustrating part about the presentation is that there is no sense of ownership or responsibility. The presentation does not speak on any interventions or how they plan on fixing their problems. This exposes their lack of preparation and takes away from the credibility of the municipality. He said he did not feel confident with the recovery plan as he feels as though the recovery plan has not been well presented or planned. The issue of the inability to pay contractors within 30 days should not be happening, as it is illegal, and again there has been no interventions mentioned by the municipality to fix this problem.

The Chairperson thanked the Members for their comments, but pointed out that it was very clear that the Committee was not happy with the lack of inter-governmental communication, and the poor presentation which was lacking so much information which was relevant for the discussion. The municipality did not come adequately prepared; rather, they came with excuses and challenges, without making any suggestions or having any interventions. Thus, the Chairperson requested that the Mangaung Metropolitan Municipality return and come back next week better prepared to answer the questions posed to them, and that they come with a better presentation and recovery plan, with the Department.

The meeting was adjourned.

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