City must dip into reserves as lost funding hits R509m

With more than half a billion rand lost in conditional grants thanks to National Treasury not authorising Nelson Mandela Bay’s rollover grant funding, the city has been forced to dip into its reserves.

The funding was earmarked for infrastructure development and drought mitigation measures.

On October 23, the Treasury’s deputy director-general of intergovernment relations, Malijeng Ngqaleni, wrote to acting city manager Mandla George telling him the city's request for the disaster recovery grant, neighbourhood development partnership grant, urban settlement development grant and public transport network grant to be rolled over from the previous financial year to this year, had been rejected.

This amounts to R509m that would have been rolled over from the 2019/2020 financial year to the 2020/2021 financial year.

Ngqaleni said reason for the rejection, among others, was because the disaster recovery grant was a rollover of a rollover and the position of municipal manager had been vacant longer than six months.

“Your municipality is reminded that the municipal council does not have the legal authority to decide on the use of conditional grant transfers from the national government outside the legal framework set out in the annual Division of Revenue Act and its various gazettes,” Ngqaleni said.

The Treasury has withheld the almost R1.6bn in grant funding because of the city’s failure to elect a permanent mayor in 11 months, among other reasons.

Deputy mayor Thsonono Buyeye has been acting mayor since December, when now-deceased UDM councillor Mongameli Bobani was ousted through a vote of no confidence.

In a statement, DA councillor Malcolm Figg said the ANC-led coalition should take full responsibility for the “devastating financial blow” dealt to the city.

“Unlike the funds that have been withheld by the National Treasury to date, which could still be paid to the metro if their conditions are met, when funds are not allowed to be rolled over, the unused funds are deducted from the next respective grant allocations.

“The funding is, effectively, lost forever.

“National Treasury has not made a single payment to the metro since December 2019,” Figg said.

The metro started the financial year with R753m less in its bank account.

Still outstanding from the Treasury is an equitable share allocation of R498m — most of which is meant to subsidise the Bay’s most destitute residents — and just over R1bn worth of grants for the 2020/2021 financial year.

The next scheduled payment — of R150m — was due for release on Monday for the Bay’s neighbourhood development partnership grant (technical assist).

Previously, while speaking about the planned Section 139(1)(A) intervention in the city, the co-operative governance chair in the Eastern Cape legislature, Thabo Matiwane, said the metro had dipped into its reserves because of the impasse between the city and the Treasury.

An insider at the municipality confirmed the city had dipped into its reserves but would not say by how much.

Among the key demands that the Bay received from Treasury were the filling of the mayoral position as well as the appointment of a municipal manager.

The Treasury initially decided to withdraw the funds because the metro had failed to act on a report on a forensic investigation into the Integrated Public Transport System about three years ago, which uncovered alleged large-scale corruption and how hundreds of millions of rand had been wasted.

Municipal spokesperson Mthubanzi Mniki said he would only be able to comment on Tuesday.

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