Nelson Mandela Bay’s Human Settlements grants crisis — what really happened?

While Nelson Mandela Bay’s Department of Human Settlements blamed new environmental permits and slow contractors for the central government’s decision to withhold R440-million in grants, a new council report tells a different story. According to the document, the real causes of the delays are instances of serious maladministration.

On 5 February, the National Department of Human Settlements wrote to the Nelson Mandela Bay metro, informing it that it intended to withhold R440-million in grant funding for its informal settlements because of severe underspending by the metro. The two affected grants were the Urban Settlements Development Grant (USDG) and the Informal Settlements Upgrading Partnership Grant (ISUPG).

At the time, the metro had spent only 41% of these grants. The letter, signed by the Department of Human Settlements’ director-general, Dr Alec Moemi, asked the municipality to send a recovery plan indicating how it intended to address the severe underspending.

According to the Treasury, the USDG is a supplementary, conditional capital grant allocated specifically for the eight metropolitan municipalities to support the development of sustainable, integrated human settlements.

The ISUPG is for the upgrading of informal settlements in partnership with communities. It focuses on providing essential services, security of tenure and site preparation for future housing.

‘Dissatisfactory’ recovery plans

The letter stated that the department had stopped the next tranche of payments due to the municipality, as its recovery plans were “deemed dissatisfactory”.

But a few days earlier, on 29 January, the metro’s executive director of human settlements, Tabiso Mfeya, speaking at a city council meeting, proposed that the budget from these grants be channelled instead into mainly upgrading electricity infrastructure in several informal settlements in the metro.

This included a R37-million substation for Joe Slovo, a R1.5-million substation for Mabandla and electrical connections in Bayland at a cost of R10-million.

The amended proposals also included two roads for Joe Slovo and Khayamandi costing R40-million. Opposition councillors accused the ruling coalition of using this as a “political tool” in the upcoming local government elections. This proposal was put to a vote but was not passed by the councillors.

At the time, Mfeya complained that a new environmental authorisation process was a major factor in slowing down their work.

However, two weeks later, in a report filed before the Human Settlements Committee, Mfeya highlighted issues that led to non-performance in his department, which instead pointed to serious maladministration.

These were:

• R40-million of the grants intended for the upgrade of roads and stormwater were at risk because contractors could not be appointed, as the Auditor-General had flagged the contracts.
• R21-million was at risk for toilets in informal settlements as the “budget was not captured correctly in the system”. While the council voted to rectify this, it was too late as the contract had by then expired, and the Bid Adjudication Committee did not approve a new contract.
• A budget of R8.4-million for the Arlington Waste Site was not correctly captured in the system, and while this too was corrected by a council vote, the contract had also expired, and the system “locked in” the old budget.

What’s next?

Highlighting the seriousness of the situation, Mfeya said in the report that the department would “bring back” the request for a budget adjustment to the council. The next council meeting is scheduled for this week. He added that even if the adjustments were voted in this time, more contracts would have expired.

Following this meeting, the Nelson Mandela Bay metro issued an upbeat report on the Human Settlements committee meeting, stating: “During the meeting, challenges were acknowledged, and corrective measures are being considered to improve efficiency and coordination.

“Despite these setbacks, overall project progress was reported as satisfactory. Several projects have been completed in line with the funding received, while others remain under implementation and are progressing steadily.

“The meeting further noted that the appointment and finalisation of some contractors are currently under way. All relevant directorates are committed to ensuring that serviced projects are fully prepared and ready for implementation to avoid further delays.

“The municipality remains committed to accelerating land release, improving spatial integration, upgrading informal settlements, and ensuring responsible expenditure of the capital budget to enhance sustainable human settlements across Nelson Mandela Bay.” DM