Human Settlements on allegations that it owes Western Cape R521 million

08 Nov 2024

The Ministry of Human Settlements has taken note of the allegations made by the Democratic Alliance in their media statement released on November 6, 2024, claiming that the National Department of Human Settlements (NDHS) owes the Western Cape R521 million.

This allegation presents an opportunity for the department to clarify the information and provide transparency on the matter.

The financial information shared by the department today contradicts claims made by Dirk Wessels, MPP and Democratic Alliance's Western Cape Spokesperson on Infrastructure.

In the 2023/2024 financial year, the province received two Provincial Human Settlements grants namely, the Human Settlement Development Grant (HSDG) and the Informal Settlements Upgrading Partnership Grant (ISUPG).

The HSDG initial allocation was R1.7 billion and with the approved rollover of unspent funds from the 2022/23 financial year of R103 million, this increased the allocation to R1.804 billion.

The province, like all other provinces, was not immune from the budget cuts.

This resulted in the provincial allocation being reduced by an amount of R214 million.

The department conducted its routine performance assessment of the Human Settlement Development Grant (HSDG) across all provinces, as stipulated by the Division of Revenue Act (DoRA) provisions.

This evaluation revealed that the Western Cape Province was underperforming and at risk of underspending its annual allocation.

The performance assessment process was comprehensively executed, involving a series of formal steps.

This included sending letters of intention to withhold funding to the Western Cape Province, a MinMec meeting where performance issues were thoroughly discussed, and notification to National Treasury regarding the province's performance concerns.

In compliance with the Division of Revenue Act (DoRA) requirements, the Transferring Officers sent a notification of intention to withhold funds seven days prior to stopping the funds.

This was done on September 22, 2023, citing concerns of underperformance. A follow-up notification was sent on December 11, 2023, to the Provincial Head of Department (HOD), indicating the intention to withhold future grant tranches. Additionally, a letter dated December 12, 2023, was addressed to the Provincial Member of the Executive Council (MEC).

The Western Cape Province was given the opportunity to respond to concerns about their Human Settlement Development Grant (HSDG) usage.

However, their response, dated January 9, 2024, revealed an inability to spend R120 million of the allocated funds and lacked strategies to mitigate underspending risks.

As a result, the department submitted a request to the National Treasury, recommending that R250 million be withheld from the Western Cape Province.

The National Treasury approved this request, which was subsequently published in Gazette Number 50137 on February 16, 2024.

The withheld funds were then reallocated to support performing projects in Limpopo, ensuring effective utilization of resources.

The total available funds for the province then amounted to R1,340 billion after considering the approved rollover (of R103 million), budget cuts (of R214 million) and the stopped and reallocated funds of R250 million for the 2023/24 financial year.

The province managed to fully spend the adjusted allocation of R1.340 billion as of 31 March 2024.

The Informal Settlements Upgrading Programme grant (ISUPG) was allocated R505.9 million for the financial year.

With the approved rollover funds of R109 million from the 2022/23 financial year and Cabinet-approved budget cuts of R57 million, the total adjusted budget amounted to R557.9 million.

The Department, as in the case of HSDG, issued a letter indicating underperformance concerns of both grants. There was, however, no stopping and reallocation of funds under this grant during that financial year.

It is worth noting that the province has reported a final expenditure of R433 million as at 31 March 2024 which implied that R125 million was unspent under this grant. The provisional outcome of the rollover applications by the National Treasury thus far indicates that the Province did not apply for the rollover of these unspent funds, and they are likely to revert to the National Revenue Fund.

The Department expressed concerns about underperformance regarding both grants, issuing a letter to address these issues. However, unlike the HSDG, no funds were stopped or reallocated under the Informal Settlements Upgrading Programme grant (ISUPG) during the 2023/2024 financial year.

Notably, the province reported spending R433 million as of March 31, 2024, leaving R125 million unspent.

Unfortunately, the National Treasury's provisional outcome indicates that the province did not apply for a rollover of these unspent funds, which will likely revert to the National Revenue Fund.

Given these facts, it is clear that the National Department of Human Settlements (NDHS) does not owe the Western Cape Province any funds and did not wilfully withhold funds for the 2023/2024 financial year. Any claims suggesting otherwise seem to avoid accountability.

Statement issued by Terrence Manase, Spokesperson to the Minister of Human Settlements, 8 November 2024