SEVERAL provinces including Gauteng, Western Cape, Limpopo and the Free State are set to lose hundreds of millions of Rands allocated by the National Treasury to build houses, upgrade informal settlements and improve education infrastructure due to non-expenditure.

Finance Minister Enoch Godongwana announced this week that Gauteng will lose R300 million in the human settlement development grant (HSDG) while the Western Cape’s R200 million allocation will also be stopped together with the Free State, which will lose R50 million.
In the informal settlement upgrading partnership grant (ISUPG), allocations of R150m and R100m to Gauteng and the Western Cape, respectively, will be stopped.

Godongwana said both decisions followed a revised allocation by the National Department of Human Settlements. Limpopo is set to lose almost R188m from its education infrastructure grant (EIG) after the National Department of Basic Education also revised its allocations.
For the HSDG, the Department of Human Settlements has reallocated R250m to Mpumalanga, R200m to Limpopo and KwaZulu-Natal will receive R100m.

The IUSPG reallocation will go to the North West (R150m) and the Eastern Cape and the Free State will share R50m each. KwaZulu-Natal has been reallocated almost R138m in the EIG while the Free State will receive R50m, according to Godongwana.
He said the government notice was published in terms of the Division of Revenue Act (Dora) and provides information on adjustments to existing allocations to provinces for the 2024/25 financial year.

”This is necessitated by the need to stop the flow of funds in terms of section 18 of Dora, as amended, and to re-allocate the stopped funds to provinces, as approved in terms of section 19 of Dora, as amended,” he explained.
The act allows the stopping of allocations in respect of conditional allocations to provinces and the reallocation of the stopped conditional allocations to provinces.
In terms of Dora, the National Treasury may, in its discretion or on request of a transferring officer or a receiving officer, stop the transfer of an allocation, or a portion thereof, to a province or municipality.

For a province this occurs if a serious or persistent material breach of this Dora, as envisaged in the Constitution, occurs.
The Constitution states that Treasury has a duty to enforce compliance with measures established and to stop the transfer of funds to organs of state should they commit serious or persistent material breach of those measures.
This is done if the National Treasury anticipates that a province or municipality shall substantially underspend on the allocation, or any programme, partially or fully funded by the allocation.
In addition, Treasury is empowered to, after consultation with the transferring officer and the relevant provincial treasury, determine the portion of the allocation to be re-allocated as the same type of allocation as it was allocated originally, to one or more provinces or municipalities.
The condition is that the allocation must be spent by the end of the 2024/25 financial year, which is on March 31, 2025.

This is not the first time the National Treasury has stopped allocations to organs of state in the past two financial years.
In October last year, Gauteng cooperative governance and traditional affairs MEC Jacob Mamabolo revealed that the eMfuleni Local Municipality had returned about R636.2m to the National Treasury allocated as part of the municipal infrastructure grant (MIG) since 2019/20 after spending only about R228.3m of its R914.4m.
The troubled municipality in the Vaal could only complete 12 of its 19 MIG projects during this period.

loyiso.sidimba@inl.co.za

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National Treasury halts R1bn in provincial development, infrastructure grants over poor spending