ANC-run provinces lose R2,5bn grant

April 8 2011 

Finance Minister Pravin Gordhan has stopped the payment of nearly R2,5-billion to the eight ANC-run provinces because they failed to spend properly money intended for roads, schools and other vital infrastructure.

The DA-governed Western Cape is the only exception - it has received 100 percent of its provincial infrastructure grant.

The DA said this was testimony to the way the party managed public funds, but the withholding of funds was “a tragedy” for residents of the other provinces, whose governments had “let them down”. 

The Treasury’s announcement, gazetted this week, comes just weeks before the crucial local government elections are held across the country on May 18. 

Gordhan announced that R2,47bn in payments had been stopped in line with Section 17 of the Division of Revenue Act. 

This section allows the minister to block transfers to provinces and municipalities if he anticipates that they “will substantially underspend on that programme or allocation in the financial year”. 

By the end of the 2010/11 financial year on March 31, the Northern Cape had failed to spend R275,4 million, or 46 percent, of its grant, Mpumalanga (R439,3m) and Free State (R391,2m) 45 percent, Eastern Cape (R502,7m) 25 percent, North West (R194,6m) 20 percent, Limpopo (R261,5m) 15 percent, and KwaZulu-Natal (R119,8m) 5 percent. The Western Cape alone spent its entire allocation, of R794,8m. 

The DA’s federal executive chairman, James Selfe, said yesterday that “the failure of ANC-run provinces to spend this money” would affect service delivery to the “poorest of the poor in those provinces”. 

“While this bears testimony to the DA’s good stewardship of public funds and its ability to deliver infrastructure-led economic growth, it is a tragedy for residents of other provinces who are desperate for infrastructure development, maintenance and service delivery,” Selfe said. 

“Their governments have let them down, and there is no excuse for it.” 

The provincial infrastructure grants, according to the Treasury, are intended to “help accelerate construction, maintenance, upgrading and rehabilitation of new and existing infrastructure in education, roads, health and agriculture... to maximise job creation” and “enhance capacity to deliver infrastructure”. 

Treasury spokeswoman Lindani Mbunyuza said that all provinces had been warned about the looming problem of underspending, but “only one, the Western Cape, implemented the corrective measures such that the transfer was released”. 

“The most critical issues that must be addressed (by the other provinces) are the obstacles to spending that lead to delays in infrastructure projects,” Mbunyuza said. 

“The obstacles include poor supply chain management, poor contract management, ineffective financial controls and low skills capacity in implementing departments.” 

The Western Cape also received and spent its full hospital revitalisation community library services grants, while six provinces lost a combined R452,6m from their allocations for hospitals and five have to return R50,2m left from their libraries grants to the Treasury. 

In the Western Cape, former premier Lynne Brown (ANC) said instead of showing only that the allocation was being spent, the DA had to show where this money was being used. 

Cope Western Cape chairman Mbulelo Ncedana said although financial management in the province had improved under the DA administration, this was no proof that it was delivering to poorer communities. 

“That money is not going to the poor. The DA are window-dressing when they claim they are using the grants to deliver to the poor.” 

 http://www.iol.co.za/news/south-africa/western-cape/anc-run-provinces-lose-r2-5bn-grant-1.1054163