MPs worried about R20bn Covid-19 funds for municipalities

MPs have raised concern about a lack of information on how municipalities are going to use the R20bn allocated to them to cushion the impact of Covid-19.

The National Assembly's portfolio committee on co-operative governance and traditional affairs (Cogta) held a meeting on Thursday where the department of co-operative governance was set to brief MPs on how the R20bn allocation announced by President Cyril Ramaphosa would be spent.

After a 25-page presentation, which focused on how municipal revenues will be impacted by Covid-19, committee chairperson Faith Muthambi led the charge against the department.

“There is nothing new. We can't do the same things and expect different results. We are in a state of disaster and I believe we should do things differently,” she said.

“The report doesn’t say much about how this Covid-19 will affect new developments, spatial planning, because it is only reduced to revenue that will be a challenge. It doesn’t address these other issues.”

She said it was important for MPs to get a detailed plan on how the allocation would be spent.

“We are raising this because we want to make sure that this money is utilised for its intended purposes because you might find that there are people who will use this money to pay salaries.

“There are municipalities who can't pay salaries. Once you give them this allocation, instead of attending to the pandemic, you will find it doing other things, that is why we want that assurance from yourselves on how are you going to make sure you prevent that from happening.

“It has happened, we know what we are talking about,” added Muthambi.

Muthambi said a stimulus package should make radical advances towards addressing the fault lines exposed by Covid-19.

MPs from other political parties also expressed their disappointment in the department's failure to give a detailed expenditure plan, saying this had been the purpose of the meeting.

Deputy minister Parks Tau said they were in constant interaction with the National Treasury as to when the money will be available. They’ve indicated that this has to be done through an appropriations process. Parliament needs to pass an amended budget.

He said on the basis of the amended budget, municipalities would be able to institute their processes of amending their budgets. “Until we have gone through the appropriations process, we don’t have the money at our disposal. It is certainly needed by municipalities urgently,” he said.

The department's deputy director-general, Themba Fosi, had earlier said that to stimulate local economic development to counter job losses as a result of Covid-19, immediate interventions linked to the use of the R20bn will be implemented.

These included facilitating the establishment of operation and maintenance co-operatives, small, medium and macro enterprises development and labour intensive delivery.

Fosi said the R20bn will be additional to the budget presented in February, but parliament has to adopt the budget, then the department would have to do an adjustment budget to cater for the R20bn and those processes will rely on the parliamentary processes. He said the funds will most likely be available in August due to the processes that still have to unfold.

Fosi had told MPs that at present, municipalities were subsidising 10.4 million poor households at the rate of R435.04 a month for free basic services and this translated to R54bn.

He said the number of poor households are expected to increase to between 14 million and 16 million depending on the reality on the ground. This increase will result in a deficit in the municipal funding and will negatively affect municipal liquidity. “We believe that municipalities will need to be supported to bridge this funding gap,” he said.

Fosi said R1.5bn has been reprioritised from the municipal infrastructure grant for municipalities to spend between now and the end of June. This money has been committed to municipalities so that they can attend to water and sanitation related projects from the municipal infrastructure grant allocation.