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Budget cuts of R84m will slow delivery of 10 more Cape Town housing projects

The City of Cape Town has invited residents to comment on the proposed changes to its revised housing policy. File Photo: Phando Jikelo/African News Agency(ANA)

The City of Cape Town has invited residents to comment on the proposed changes to its revised housing policy. File Photo: Phando Jikelo/African News Agency(ANA)

Published Jul 20, 2020


Cape Town - As the demand for housing grows and land invasions put pressure on the City to provide shelter and services, cuts to the housing budget have put the brakes on 10 housing developments in the city.

The City told Parliament's Portfolio Committee on Co-operative Governance and Traditional Affairs (Cogta) that since its May 2020 budget was approved by council the Department of Human Settlements has experienced a cut of R84 million for the department's allocation of the Urban Settlements Development Grant (USDG).

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Housing Development director Rayan Rughubar said: “There are 10 projects that have seen a reduction from R206 million to R122 million. We have managed to keep the current housing projects that are under construction going by starting to hold back some of the new projects so that the funding can be allowed to flow to the projects that are under construction.

“But it means these 10 projects will get delivered later than anticipated.”

He said the department had started off with an approved amount of the USDG grant of R536m. It was then reduced to R424m and now they are sitting with a USDG of R456m.

Rughubar said the province had also reduced its Human Settlements Development Grant (HSDG) by R173m, which would allow the City to build about 1 600 houses in the current financial year.

Metros around the country have had USDG grants reduced significantly. Mangaung will have a 37% reduction, the City of Ekurhuleni will receive a 6% reduction and the City of Tshwane a 20% cut.

In September the Cape Argus reported that the City did not spend R178m of a R1.48 billion USDG, and asked for R117m to be rolled over and the rest to be returned to the National Treasury. A portion of 4% was unspent.

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“We had initially anticipated 2 103 service sites being delivered in the current financial year and 3 356 top structures, but with the recent cuts the top structures will be substantially affected. We are still aiming to deliver our service sites based on moving funding to those projects that are able to deliver and holding back on new projects that have not yet started,” Rughubar said.

Mayor Dan Plato said: “I believe that the City has made some progress on the housing front despite these budget constraints. Many of our housing projects are not only for coloured people or black people - they are integrated housing projects. The issue of where we are going to change apartheid spatial planning is high on our radar; it’s exactly what we are doing. We have various projects under way, we are awaiting the Salt River market project and the Conradie Project.”

Mayco member for Human Settlements Malusi Booi said: “We are well aware that there is not enough money to build houses. But we must stress we are prioritising reversing apartheid spatial planning.”

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Development Action Group executive director Aditya Kumar said: “I believe these budget constraints won't have an impact, primarily because they should use the USDG and HSDG.

“Historically the City has spent very little money in terms of its allocation so there has been a consistent underspend. The pandemic should bring more creativity in the form of housing delivery.”


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Related Topics:

City of Cape Town