On 14 February, the National Treasury’s Ogalaletseng Gaarekwe, the acting deputy director-general for intergovernmental relations, sent an urgent letter to the Nelson Mandela Bay Metro asking it to explain within seven days why R262-million in conditional infrastructure grants should not be withdrawn due to underspending.
According to the letter, the following payments will be stopped:
- R104.6-million of the Regional Bulk Infrastructure;
- R143.4-million of the Urban Settlements Development; and
- R14.5-million of the Informal Settlements Upgrading Partnership.
This comes after the Treasury withdrew R430-million in grants last year and also refused to roll over a R148-million grant that was meant to pay for the rehabilitation of water pump stations, the purchase of telemetry equipment and the upgrade of the city’s struggling wastewater treatment plants.
The late appointment of contractors and deviation from the tender process were cited in the August 2024 letter from Gaarekwe as reasons why they refused the roll-over of R148-million.
The Treasury’s latest letter asks the municipality to respond by Friday, 21 February and explain why there was underspending, provide a progress report on previous funds that had been rolled over, and give a commitment that grants will be fully spent by June 2025.
In the 2023/2024 financial year, the metro lost a further R430-million in conditional grant funding. In May 2024, former mayor Gary van Niekerk insisted that the metro would have spent 90% of his budget by the end of the financial year in 2024.
Read more: Nelson Mandela Bay Metro asks Eastern Cape government to send an acting city manager
Van Niekerk is officially still the deputy mayor, but was suspended from the council after being found guilty in a disciplinary hearing. He has also been charged with fraud. He appeared in court in December 2024.
The letter was triggered by the metro’s alarming underspending, as detailed in the mid-year report to Treasury. The ANC’s Babalwa Lobishe took over from Van Niekerk as mayor in November.
The Auditor-General also recently delivered a grim report on the city’s finances.
NMB ‘fully committed’ to service delivery
Nelson Mandela Bay spokesperson Sithembiso Soyaya said the metro wanted to reassure the public that it remains “fully committed to delivering quality services to our residents, despite the challenges posed by the potential withdrawal of grant funding”.
“While we acknowledge the concerns surrounding this matter, we want to emphatically state that the municipality has proactive measures in place to mitigate any impact on service delivery. We are actively engaging with the National Treasury and other relevant stakeholders to find sustainable solutions that will ensure continued funding for critical projects.
“We remain confident that through constructive negotiations, we will reach an outcome that safeguards service delivery and upholds our commitment to our communities.”
Opposition demands answers
Lawrence Troon from the Good party said the grants were meant to be used to improve the quality of life for households. Failing to spend the money was an indictment of the current administration.
“This is not the first time the municipality has underperformed financially. Last year, the municipality lost R430-million in grant funding due to severe underspending.”
Leader of the Mayibuye Civic Movement and former mayoral committee member and councillor Tukela Zumani said that in a city riddled with failing infrastructure, a high unemployment rate and an ever-worsening crime rate, it was sad to read that money that should be serving the people was returning to the National Treasury because of poor performance.
“The executive mayor Babalwa, MMCs Khanya Ngqisha and Thembinkosi Mafana, please tell the residents of the Nelson Mandela Bay Municipality why the money hasn’t been spent.
“The Budget Performance Review Committee is a subcommittee of council that is meant to provide support to struggling departments. It is co-chaired by the executive mayor and the MMC for budget and treasury.
“It had not been sitting for at least four years before I resuscitated it during my tenure as MMC. It continued working very well under the leadership of Retief Odendaal during his tenure as executive mayor.
“I do not know if the committee has been sitting during the administration of Gary van Niekerk or that of Babalwa Lobishe, but I know that today the entire senior management is struggling to put together responses to the letter from the National Treasury. They are expected to do, in one day, work that is supposed to be taking place all year round,” he said
“Are we in the situation because of the incompetence of the officials, or are we where we are because of a lack of quality leadership?” he asked.
‘ANC ineptitude’
The Democratic Alliance’s Werner Senekal said as of 31 December 2024, the municipality had spent only R437.16-million (22.8%) of its R1.913-billion capital budget.
“The ANC’s ineptitude is not the sole reason for the coalition government’s failure. Smaller parties that prop up the ANC in Nelson Mandela Bay’s coalition government must also take responsibility.
“If this grant funding is lost, the metro will suffer an even more devastating collapse of service delivery, affecting every ward. The parties supporting the ANC will be equally culpable, unable to escape blame for the impending disaster.
“Losing this funding would be catastrophic, depriving the local economy of direct investment and job creation opportunities. The ANC-led coalition government’s disregard for the financial wellbeing of the metro’s citizens is shocking, particularly given the cancellation of yet another budget and treasury sub-committee meeting. This committee conducts oversight over capital expenditure, but has not met in six months.
“We will again demand an immediate sitting of the budget monitoring sub-committee and will table a motion to increase transparency in supply chain processes, facilitating faster tender awards,” he said.
‘Poor governance and inefficiency’
Lance Grootboom from the ACDP said he was deeply concerned and disappointed.
“Despite former mayor Gary van Niekerk’s assurances that 99% of the funds would be utilised, the city failed to spend crucial grant allocations… This failure is a direct result of the city’s delays in appointing service providers, a clear indication of poor governance and inefficiency. These grants were meant to upgrade and improve the city’s ageing infrastructure, which is already in a dire state.
“Nelson Mandela Bay is heavily reliant on grant funding, with approximately 60% of its capital project budget sourced from grants. The inability to utilise these funds exacerbates the ongoing service delivery crisis, leaving residents without the necessary infrastructure upgrades and basic services they desperately need.
“The ACDP calls for accountability from the coalition government and urgent action to prevent such mismanagement in the future. The residents of Nelson Mandela Bay deserve a government that prioritises service delivery and ensures that critical funding is spent effectively to improve the lives of all citizens,” Grootboom said.
Nelson Mandela Bay Business Chamber CEO Denise van Huyssteen said it was “very disappointing and of great concern to note that once again National Treasury intends to stop funds being transferred to the municipality due to underperformance/non-compliance”.
“We remain extremely concerned about the lack of maintenance and investment in infrastructure in the metro and we therefore urgently urge the municipality to take the necessary corrective measures that will enable and ensure that the grants are received and spent accordingly,” she said. DM