Close to R900 million in conditional grants to municipalities in KwaZulu-Natal have been suspended by the National Treasury due to poor management of these grants.

Finance MEC Francois Rodgers has announced the national Treasury's suspension of conditional grants to 25 municipalities in the province. Rodgers stated that the flow of conditional grant funding amounting to R861.4 million from the National Treasury to these municipalities has been suspended due to non-performance.

Earlier this month the Auditor-General raised concern about the financial performance of some KZN municipalities.

On the grant suspension, Rodgers said his department will comply with the directive from National Finance Minister, Enoch Godongwana. Assessments involving Provincial and National Treasury officials have found that the affected municipalities performed dismally against the objectives and goals set out in various programmes, including:

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

“We are incredibly disappointed by the underspending and poor financial governance 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 required in this regard is to reduce the municipalities’ allocation,” he said.

The statement noted that prior to Treasury’s intervention, the National Treasury’s Neighbourhood Development Partnership Programme and several departments had established that there are KZN municipalities that would not be able to fully utilise the grants allocated for the 2024/25 financial year.

These departments approached the Treasury, requesting that portions of the conditional grant allocations to affected municipalities be stopped in terms of section 18 of the Division of Revenue Act (DoRA), 2024.

“However, Treasury opted to establish reasons for the anticipated significant underspending on the part of the municipalities in line with section 18 of DoRA, as amended. On 14 February 2025, Treasury wrote to 34 municipalities in KZN regarding their poor management of conditional grants. The municipalities were asked to explain themselves in line with section 38 (2) (b) of the Municipal Finance Management Act.

“Following an analysis of responses submitted by the municipalities, it was decided that funding to the 25 municipalities will be suspended for the 2024/25 financial year. This decision will be gazetted in line with the requirements of DoRA, as amended,” said the statement.

THE MERCURY