Independent Newspapers
File photo: Simphiwe Mbokazi
Durban – The eThekwini municipality has approved an application for a R750 million loan from Absa to fund future capital projects, despite concerns that key departments are under-spending their budgets.
A municipal budget performance report by the provincial treasury said that of the R5.3 billion allocated to eThekwini, only R1.4bn, which is 27 percent, of its capital budget had been spent.
The most common reason cited by municipalities for under-spending was delays in the supply chain management (SCM) processes, Finance MEC Ina Cronje told members of the provincial legislature this week.
She said municipalities needed to plan better because there was no need for SCM processes to delay implementation of projects.
On Thursday, eThekwini finance and procurement chairwoman Fawzia Peer said the R750m loan was to fund future projects. She said the existing budget had already been allocated to projects but some of those projects had not materialised because of SCM delays.
“The loan is for the forthcoming year. Loan capital expenditure budgets are for a three-year cycle. When the figures were submitted to the provincial treasury we had only spent 27 percent of the budget but, to date, we have spent 45 percent of the budget,” she said.
Peer added that although the city had underspent, she was confident all municipal departments would meet their targets by July.
Minority Front councillor Patrick Pillay said the loan was projected to be more than R1bn but, because of the under-expenditure, it had been reduced to R750m.
“We have always raised concerns about the loan borrowing because of the negative impact it could have on our finances,” he said.
A document presented to the finance and procurement committee on Thursday revealed that the municipality had to date built 2 302 houses, but had spent 58 percent (R668m) of its housing budget. The city had only three months to meet its service delivery target and build a total of 7 200 houses.
DA councillor Dean Macpherson said municipal departments would fail to spend their budgets before the end of the financial year on June 30.
“The report indicates what percentage of the budget has been spent to date but does not indicate how the remaining allocations will be spent,” he said.
The municipality was now “budget dumping” which was when the city spent money on whatever it could to meet its 100 percent delivery targets, he said.
“The worst offender has to be the housing department.”
Macpherson said what was most concerning was that the budget of R1.1bn was yielding so few houses which meant money “is clearly being wasted or siphoned off”.
But city treasurer Krish Kumar said the delivery of houses was a process.
“We first acquire land and then we have to service the land and then build the top structures,” he said.
In response to Macpherson, Kumar said the budget was being spent on infrastructure.
“The issue of spend is a problem in all municipalities. All municipalities are struggling withhousing,” he said.
gugu.mbonambi@inl.co.za
The Mercury
