Councillors Voice Concerns Over Funding Cuts To 25 KZN Municipalities

Service delivery issues are anticipated to escalate significantly in the coming months, as numerous municipalities in KwaZulu-Natal now confront the abrupt suspension of vital funding, casting a pervasive shadow of uncertainty over countless communities throughout the region.

This development stems from National Treasury’s decision to suspend conditional grant funding totalling R861,4 million to 25 municipalities in KwaZulu-Natal, a measure prompted by their consistent failure to meet performance expectations.

Among the municipalities affected are Newcastle, Ladysmith, and Vryheid, each now facing challenges as a result of this financial curtailment.

The KZN Treasury has revealed that comprehensive evaluations, conducted in collaboration with Provincial and National Treasury officials, exposed glaring deficiencies in these municipalities’ performance against the objectives and targets delineated in multiple programs.

These initiatives include the Energy Efficiency Demand Side Management (EEDSM), the Expanded Public Works Programme (EPWP), the Informal Settlements Upgrading Partnership Grant (ISUPG), the Integrated National Electrification Programme (INEP), the Municipal Infrastructure Grant (MIG), the Neighbourhood Development Partnership Grant (NDPG), the Public Transport Network Grant (PTNG), the Regional Bulk Infrastructure (RBIG), the Rural Roads Asset Management Systems Grant (RRAMS), and the Water Services Infrastructure Grant (WSIG).

Furthermore, KZN Finance MEC Francois Rodgers articulated his dismay over the situation, reflecting on the broader implications of this funding halt.

“We are incredibly disappointed by the underspending and poor financial government on the part of these municipalities, as this impacts service delivery. The decision to suspend the flow of funds follows attempts to rectify the situation with the municipalities. Unfortunately, it became clear that the only appropriate action in this regard is to reduce the municipalities’ allocation,” he declared.

Before this decisive action, KZN Treasury noted that a coalition of national departments—including the National Treasury’s Neighbourhood Development Partnership Programme, the Department of Water and Sanitation, the Department of Cooperative Governance, the Department of Public Works and Infrastructure, the Department of Transport, and the Department of Mineral Resources and Energy—had determined that several municipalities were unlikely to fully expend their allocated grants for the 2024/2025 financial year.

These departments then petitioned National Treasury to suspend portions of the conditional grant allocations to the underperforming municipalities, a request made under Section 18 of the Division of Revenue Act (DoRA), 2024, (Act No. 24 of 2024), as amended.

“However, Treasury opted to establish reasons for the anticipated underspending on the part of the municipalities in line with Section 18 of DoRa, as amended,” said KZN Treasury.

Moreover, Treasury dispatched letters to 34 KZN municipalities concerning their inadequate stewardship of conditional grants. In this correspondence, KZN Treasury underscored that the municipalities were obligated to justify their lapses in accordance with Section 38 (2) (B) of the Municipal Finance Management Act No. 56 of 2003.

Following a thorough review of the responses submitted by the municipalities, KZN Treasury announced that funding to the following 25 municipalities would be suspended for the 2024/2025 financial year, with this resolution slated for official publication in the government gazette as mandated by DoRA. The impacted municipalities are:

·         Newcastle

·         Alfred Duma (Ladysmith)

·         uThukela District

·         eThekwini

·         uMdoni

·         Ray Nkonyeni

·         Msunduzi

·         Mkahamathini

·         uMzinyathi District

·         uPhongolo

·         AbaQulusi (Vryheid)

·         Nongoma

·         Zululand

·         Jozini

·         uMhlathuze

·         Mthonjaneni

·         King Cetshwayo

·         Mandeni

·         KwaDukuza

·         Maphumulo

·         iLembe District

·         uBuhlebezwe

·         uMzimkulu

In response to this development, Democratic Alliance Chairperson for the uThukela District, Councillor Thys van Rensburg, voiced significant apprehension about its ramifications.

“It is very concerning that the grant funding has been suspended, as service delivery in the mentioned communities will now be impaired. However, it shows that certain municipalities are not spending their grant funding in the appropriate time,” he remarked. Looking ahead, Councillor van Rensburg posited that the resolution to this predicament hinges on communities electing leaders from parties with proven records of effective governance and judicious grant utilisation.

Adding another perspective, Councillor Zwe Nxumalo of ActionSA and Chief Whip of Newcastle Municipality cautioned that Newcastle, along with the other listed municipalities, faces a formidable challenge.

“Municipalities are the face of service delivery, and when service delivery is hampered, people look at their respective municipalities, and not the provincial or national departments. With this in mind, service delivery and infrastructure at these municipalities are going to be impacted,” he emphasised, highlighting the direct accountability borne by local governments.

Meanwhile, Newcastle Municipality’s Councillor Samukelisiwe Yende from the African National Congress (ANC) offered a nuanced take, suggesting that the suspension reflects municipal deficiencies rather than solely governmental oversight.

“The Auditor General of South Africa has mentioned on more than one occasion that municipalities are not using their grants in the appropriate time,” she began, stressing that this recurring critique should have spurred the affected municipalities to address their shortcomings before funding was withdrawn.

Councillor Yende further elaborated on Newcastle Municipality’s specific vulnerabilities, expressing concern over its dependency on external support. “A municipality should not rely on grant funding and should be able to address service delivery through their revenue collection. However, the biggest issue at the Newcastle Municipality is the collection rate from Newcastle East, which owes the Municipality millions in Rands and this needs to be addressed, as the Municipality will now have to take steps to address service delivery without the grant funding which it relied on,” she emphasised.

She further added that the affected municipalities must now return to the drawing board to devise robust strategies to mitigate the current crisis and prevent further erosion of service delivery.

As 25 KZN municipalities scramble to secure alternative funding to replace the grants they have lost, what are your thoughts on this unfolding scenario? Share your insights in the comment section below.