R4.4bn cash for housing lies unspent

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IOL money_feb 17 .

Pretoria - Time is running out for provincial governments who have more than R4 billion in funds remaining for low-cost housing before the financial year ends in two months.

Presenting its performance report for the third quarter to Parliament’s oversight committee on housing, the Department of Human Settlements revealed that out of its R15.7bn human settlements development grant, R4.4bn hadn’t been spent, with most provinces having failed to spend 75 percent of their budget as required by this stage.

Funds left unspent by the end of the financial year revert to the Treasury to be allocated elsewhere. The Treasury may grant permission for the funding to be carried over for use in the following year.

Provinces with the largest budget slices that remained unspent by the end of last month were Limpopo, with 40 percent of the budget unspent; Northern Cape (39 percent); Eastern Cape (36 percent); and, Western Cape (32 percent).

Mpumalanga, Free State and KwaZulu-Natal all recorded underspending of just more than 20 percent, while the North West went 11 percent over budget.

The Northern Cape had delivered the fewest housing units, just more than 2 000 out of a target of 5 431, followed by Mpumalanga, which had built just more than 4 600 out of a target of 15 929.

This mismatch between Mpumalanga’s spending and its delivery angered committee chairwoman Nomhle Dambuza, who demanded that the department verify what the money had been used for before it transferred the rest of the budget for the financial year to that province.

She also raised concern about the Free State’s spending, saying the 77 percent spent should not be taken at face value, given the province’s history of poor service delivery. It had built just more than 7 000 units out of a target of 35 564 - a far cry from the 12 220 units built in the Western Cape and more than 20 000 in KwaZulu-Natal.

Gauteng built 19 439 homes, while Limpopo built nearly 10 000.

“The department can’t just spend money on provinces that are not delivering… the department also needs to demand these provinces’ operational plans, which speak to their business plans. You can’t just give money without knowing these operational plans,” Dambuza said.

The department’s chief financial officer, Funaneng Matlatsi, told the committee it had achieved only 32.9 percent of the 2014 target for households to be provided with upgraded services such as sanitation and 59 percent of its overall performance target by the end of the third quarter.

Matlatsi blamed a range of issues for the underspending and poor service delivery, including poor co-operation between provincial governments and municipalities, skills shortages among technical and managerial staff, lack of synergy between government departments and the late issuing of tenders, often leading to service providers starting work on building projects late in the financial year.

She also blamed the slow progress in sanitation provision on poor buy-in from municipalities.

The department’s director-general, Thabane Zulu, said a recovery plan promised to bear fruit this year, with efforts being made to fill vacancies at managerial level.

The department expected to fill at least 90 percent of vacant posts before the end of this financial year, Zulu said.

It was expected this would dramatically improve project management and remedy inconsistencies.

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