Finance Minister Nhlanhla Nene has stopped the transfer of R363m to the City of Johannesburg while Cape Town forfeited about R176m allocated as the urban settlement development grant (USDG). File picture: Bongani Shilubane/Independent Media

Cape Town - The DA-run Johannesburg and Cape Town metros have lost nearly R540-million meant to cover costs of provision of infrastructure to poor households due to non-performance.
Finance Minister Nhlanhla Nene has stopped the transfer of R363m to the City of Johannesburg while Cape Town forfeited about R176m allocated as the urban settlement development grant (USDG).

The allocation of the millions was stopped in terms of the Division of Revenue Act (Dora) after both municipalities failed to spend the money.

Section 19 of Dora allows the National Treasury to stop transferring funds if in its discretion or on request of a transferring or receiving officer should there be a “serious or persistent material breach”.

It also empowers Treasury to also stop the allocation if it anticipates that a province will substantially underspend on its allocation.

Cape Town and Johannesburg were identified as the poorer performing metros and the consequence would be the stopping of their allocations. The money will be re-allocated to Nelson Mandela Bay, which will receive R178.8m Buffalo City (R160m), Mangaung (R100m) and Ekurhuleni (R100m).

The purpose of the USDG is to assist metro municipalities to improve urban land production to the benefit of poor households, improve spatial integration and densities by supplementing the budgets of metros, according to the SA Local Government Association (Salga).

On Saturday, Johannesburg mayor Herman Mashaba told Independent Media that he was unaware of the stopping of the allocation of the millions. He said municipalities have been informed by Treasury that its grants would be cut.

According to Mashaba, former finance minister Malusi Gigaba said grants to municipalities would be cut. Gigaba proposed the introduction of a new, more flexible grant funding arrangement for cities that are not metros as the better way to respond to the urban development challenges they face. The City of Cape Town did not respond to questions on its poor spending of the USDG, but referred questions to three MMCs who also did not respond to inquiries made to them.

Weekend Argus