The Nelson Mandela Bay council’s failure to appoint a permanent finance boss has cost the city R50m in grant funding.
Months of delays by the city’s decision-makers to give the thumbs up for someone to fill the vacancy permanently has led to the National Treasury rejecting parts of the municipality’s application for a rollover of grant money.
The money, about R121m in total, was not spent in the 2017/2018 financial year.
More than R50m meant for the city’s bus system and electrification programme will have to be returned to the Treasury.
However, the metro’s application to roll over about R70m in disaster grant funding for its water projects was approved.
Listing the reasons for the failed rollover submission, the Treasury’s inter-government relations deputy director-general, Malijeng Ngqaleni, wrote that parts of the rollover application had also been rejected because the city had failed to prove that money had been committed to projects.
Instead, the municipality was applying for a change in scope of some projects.
“The National Treasury in assessing your rollover request used in Circular 91 of the Municipal Financial Management Act as a guide for consideration of the rollover submission by your municipality has rejected the amount of R50.4m,” Ngqaleni wrote.
An amount of R70.7m was, however, approved for disaster projects.
In total, the municipality had requested a rollover of R121.2m.
“The rejected amount of R50.4m is based on the following reasons:
“The municipality does not have a permanent CFO [chief financial officer].
“A lesser amount is approved for the [applied for] municipal disaster grant of R18.5m, which is rejected because the municipality is applying for a change of scope.
“A change of scope on projects does not constitute a commitment,” Ngqaleni wrote.
The appointment of a CFO has been dragging on for months.
On August 16, the council was meant to finally give the go-ahead, but the meeting collapsed after the then opposition councillors walked out.
At the August 27 meeting, the CFO appointment was again put on the back burner because the DA-led coalition was booted out of power and a new coalition government installed.
At the September council meeting, mayor Mongameli Bobani withdrew the CFO recommendation, saying the new coalition had to apply its mind to the appointment.
The position has been vacant since the suspension of former CFO Trevor Harper in 2015. The city parted ways with Harper earlier this year after negotiating a settlement.
Several officials have been acting in the position, including directors Jackson Ngcelwane and Barbara de Scande.
The appointment of a permanent CFO was listed in the conditions for the successful application of a rollover, while the auditor-general queried the vacancy in the city’s annual report for the 2016/2017 financial year.
In August, co-operative governance and traditional affairs MEC Fikile Xasa warned that the metro would not be approved for rollover applications should a CFO not be appointed. At the time, Xasa said the city had until the end of September to fill the vacancy.
On Thursday, Xasa said: “All I can say is that they have been warned long before August.
“We suggested that municipalities fill all critical vacancies by the end of September.”
Xasa said the matter had been discussed in various integrated forums with mayors and city managers.
“Everybody knew – the unfortunate thing is that in the end it is communities who suffer, because we have huge backlogs when it comes to infrastructure, any amount of money we get is supposed to be used, and if they were in front of me that is what I would say to them.”
Budget and treasury political head Mkhuseli Mtsila said the loss was a blow to the city.
“This is going to affect the municipality severely in terms of the equitable share.
“This means that in the next financial year we won’t have access to that kind of money.
“The Treasury was also clear that all rollovers needed to comply with planned projects, but it’s clear that this was not the case,” Mtsila said.
He said the appointment of the CFO would happen soon but the municipality could not act on it while the auditor-general was on site going through the city’s financial statements until December 10.
“Any move we make might backfire on our decision and we don’t want the AG’s backlash. We have not forgotten this, we know it a critical vacancy,” Mtsila said.
Asked why the item had been withdrawn by the new government, Mtsila said: “As the new MMC [mayoral committee member], I need to have a bite on this, I need to have a say on the process of the CFO, on who we must appoint.
“All the processes that were there happened during the administration of the DA, now I have entered.
“I am the new man in town and I have to familiarise myself with the environment that I work in and I need to not rush in making this decision.
“I know that this is urgent but I needed to be sure.”