Extra funds for informal settlements must be spent lawfully

15 May 2023

Contrary to National Human Settlements Minister Mmamoloko Kubayi’s remarks yesterday, the City of Cape Town has already allocated funds for upgrades to 16 informal settlements in Khayelitsha formed during the Covid-19 lockdown. Planning and work to service these settlements is either already complete, under way or imminent. The City is pleased with the unexpected allocation of R111m from the national department of Human Settlements but, to be spent lawfully, it must be accompanied with National Treasury approval. 

The assertions by Minister Kubayi in a media statement yesterday are inaccurate and unhelpful. In a letter on 19 April, Mayor Geordin Hill-Lewis confirmed to Minister Kubayi that the City is grateful for the funds and intends to use these for informal settlement upgrades, but must do so lawfully.

Every person working in state procurement in South Africa knows that grant funds must be spent in the financial year in which they are allocated, or they must be rolled over officially. All that is required is for the necessary National Treasury permission for the rollover of these funds to be spent in the new financial year beginning 1 July 2023.

It would be impossible for the City to spend the R111m received on 30 March in the remaining weeks of our financial year ending in June 2023 due to the time required to meet planning and procurement regulations.

Given that the Mayor has had no response to his letter, it is not clear whether rollover permission has now been secured from National Treasury. If it has been secured, we urge Minister Kubayi to confirm this in writing.

If the National Treasury has not granted a rollover, then it would seem the Minister is trying to publicly pressure the City into spending unlawfully. This kind of approach to public spending is why local government finances in the rest of South Africa are in such a mess. The City will resist these pressures and make sure that every Rand we spend is done so lawfully. 

The City cannot lawfully use the R111m allocation for programmes before June 2023, and it cannot lawfully use it in the next financial year without rollover permission.

While we do not wish to assume any nefarious intentions on the part of the Minister, the receipt of the money on the last day of the government's financial year has all the hallmarks of fiscal dumping - trying to get rid of unspent money at the last moment so that it doesn't appear on the National Department's books. Nevertheless, we are happy to receive it and will spend it once the necessary Treasury approvals are secured. 

End

Published by:
City of Cape Town, Media Office