FINANCE Minister Enoch Godongwana has given the green light for the reallocation of millions of rands from several municipalities that failed to spend the funds.
Godongwana said the Department of Cooperative Governance approached the National Treasury regarding municipalities in the Free State that have been struggling to fully spend the municipal infrastructure grants (MIG) allocated to them.
”The affected municipalities (Mohokare, Kopanong, Masilonyana and Mafube local municipalities) will have their funds to their respective district municipalities for the implementation of the projects on behalf of the underperforming municipalities,” he stated.
According to Godongwana, Dipaleseng local municipality in Mpumalanga will have R5 million reallocated to the Gert Sibande district municipality for the development of sport infrastructure that was allocated by the Department of Sport, Arts and Culture as part of the broader total ring-fenced 2024/25 allocation process for sport infrastructure as per the Department of Cooperative Governance’s request.
In addition, Godongwana said the department, through the National Disaster Management Centre, requested Treasury to ensure that R372m be transferred from the unallocated portion of the municipal disaster response grant amount of R890.6m to 36 municipalities in seven provinces – Eastern and Western Cape, Free State, KwaZulu-Natal, Limpopo, Mpumalanga and North West.
He also said an error was identified in the water and sanitation component of the MIG formula leading to incorrect calculations for 128 municipalities, which necessitated recalculation and an update.
Godongwana explained that in the funds designated for sport infrastructure, which are allocated separately from the MIG formula, an allocation of R10m for the 2024/25 financial year was mistakenly assigned to the Intsika Yethu local municipality in the Eastern Cape, but was rectified and allocated to the Ngquza Hill local municipality in the same province.
Another error was identified in the performance data utilised for determining allocations from the incentive component of the integrated urban development grant formula, which led to incorrect allocations for nine intermediate cities that receive funding through the grant.
”The issue has been resolved with the revision of the formula using the correct data to revise allocations against all nine municipalities,” Godongwana added.
In terms of the Division of Revenue Act (Dora), the National Treasury can stop allocations to departments and municipalities if it identifies a serious or persistent material breach of the act, as envisaged in the Constitution.
“Treasury can also stop the transfer of funds in accordance with the Municipal Finance Management Act (MFMA) if it anticipates that a province or municipality shall substantially underspend on the allocation, or any programme, partially or fully funded by the allocation and for purposes of the assignment of a function from a province to a municipality, as envisaged in the Municipal Systems Act.“
The reallocation of a portion of an allocation not spent by the end of a financial year is eligible for a roll-over when an intervention in terms of the Constitution or the MFMA takes place allowing the National Treasury, on such conditions as it may determine, authorise in relation to the Constitution, the transferring officer to spend an allocation stopped in terms of Dora on behalf of the relevant province.