The cash-strapped Enoch Mgijima Local Municipality (EMLM) has approved the national treasury’s intention to hold back a sum of R13.6m from the local authority conditional grants due to under-performance.
Treasury intends to withhold R11.6m from the municipal infrastructure grant (Mig) of R54m, and R2m from the integrated national electrification programme (Inep) of R7.4m.
Municipalities are expected to spend at least 40% of their total allocated funds as at the end of December of the same financial year.
EMLM municipal manager (MM) Nokuthula Mgijima said allowing treasury to stop the funds was a positive decision because if the local authority failed to spend all its conditional grant funds before the end of this financial year, it would affect future grant allocations.
“The positive thing about allowing treasury to take back its money is that it would enable us to get it back once our house is in order. I called the official responsible for allocations at national treasury about this matter, who said allowing treasury to stop the funds was a strategic move because once we fixed our problems, we could call him and request to release our money. However, if we keep the money and fail to spend it, we would have to apply for a roll-over. A roll-over does not guarantee us getting the money because it has conditions.”
Mgijima said it would be unrealistic to think the money would all be spent by the end of June, and failure to do so would risk negatively affecting funds disbursement in the next financial year.
Asked why the total allocated funds could not be spent, Mgijima explained that the municipality had been placed in the cost reimbursement model (CRM) which affected funds allocation due to its processes.
“Ordinarily the Mig is allocated to local authorities in tranches, but in the CRM we have to first spend money, submit invoices to Cogta who will scrutinise the paperwork to their satisfaction and make recommendations for us to get funds from the national department. This is a back-and-forth process because if the national department does not automatically approve the recommendations, we are subjected to further scrutiny until they are happy. This affects when we get funds and subsequently results in us delaying the payment of our contractors who then abandon us.”
The matter of the halting of the conditional grants was also discussed during a special council meeting last Thursday, where EFF councillor Luthando Amos said approving treasury’s intention was “clumsy and reckless”.
“We are a municipality in need of money. There is nothing happening in terms of service delivery for the people who voted for us to sit here and yet we are returning much-needed funds. We allowed wrong doings regarding our finances to happen in front of us, and now we are making decisions that are against the people we are supposed to serve. Reversing the money is irresponsible, because there is no sense of urgency regarding matters that affect the people of EMLM. It is a shame to be a councillor in this municipality.”
ANC councillor Noluthando Nqabisa said it was unfortunate that the funds had to be returned but the decision was a logical one.
“Saying we will spend the R55m of the Mig between now and June would be lying to ourselves and the people of Enoch Mgijima. We have to be realistic and understand that letting the money go is the best decision.”
DA councillor Lindy Haggard queried the veracity of the letter sent by national treasury informing the MM about the halting of the funds which was addressed to former MM, Chris Magwangqana.