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Gauteng Metros Face Millions in Risk: Financial Woes Continue

In a concerning revelation, the City of Ekurhuleni, one of Gauteng’s major metropolitan areas, has been issued a warning by the National Treasury, putting R607 million at risk due to underperformance and noncompliance in grant expenditures. This development echoes similar concerns raised for Johannesburg and Tshwane, highlighting a broader challenge facing South Africa’s urban centers.

Last week, Ekurhuleni joined its provincial counterparts, Johannesburg and Tshwane, in receiving letters from Malijeng Ngqaleni, Deputy Director-General of the Treasury. These letters outlined the potential withholding of grant allocations, citing reported expenditures falling below stipulated thresholds of 45% for Johannesburg and Ekurhuleni, and 40% for Tshwane.

Under the provisions of the Division of Revenue Act, the Treasury reserves the right to partially or fully halt the transfer of grant funds if it anticipates significant underspending by municipalities. The affected grants encompass crucial areas such as project preparation, urban settlement development, upgrading informal settlements, public transport, and neighborhood development.

Collectively, the three metropolitans face the risk of losing over R2.4 billion:

  • Johannesburg faces the potential forfeiture of R1.2 billion.
  • Tshwane risks losing R635 million.
  • Ekurhuleni stands to lose R607 million.

The Economic Freedom Fighters (EFF), a coalition partner in Ekurhuleni’s governance, affirmed receipt of the letter. In response, they emphasized the city’s inability to return funds to the National Treasury, citing urgent needs for service delivery among its populace.

According to the EFF, Ekurhuleni, like its counterparts, is grappling with economic downturns impacting revenue collection, necessitating reliance on grants. They expressed confidence in improving expenditure to over 95%, attributing delays to compliance issues with supply chain management policies.

These financial challenges are exacerbated by the unstable political coalitions governing Gauteng metros, hampering effective service delivery. Tshwane Mayor Cilliers Brink acknowledged the gravity of the situation, pledging transparency in addressing concerns and outlining plans for full capital allocation spending.

Echoing similar sentiments, the City of Johannesburg assured residents of ongoing project commitments, with a majority of allocated funds already committed to approved projects. However, recent developments have highlighted the precarious financial positions of these municipalities.

Ekurhuleni’s standoff with the auditor general over audit outcomes, Johannesburg’s budget adjustments downwards, and Tshwane’s escalating debt to service providers underscore the urgent need for comprehensive financial reforms and sustainable governance strategies.

As South Africa grapples with economic challenges exacerbated by the COVID-19 pandemic, efficient financial management at the municipal level becomes imperative. The risk of losing vital grant funds not only threatens infrastructure development and service delivery but also underscores the need for greater accountability and transparency in public expenditure across Gauteng’s metropolitan areas.

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