R1bn in grant funds withheld from Nelson Mandela Bay due to alleged non-compliance

National Treasury continues to withhold more than R1 billion in grant funds from Nelson Mandela Bay municipality due to alleged non-compliance, while a court appeal has held up the Eastern Cape provincial government’s resolution to intervene in the metro.

In a statement on Monday, the Eastern Cape provincial executive council said it had resolved to invoke Section(139)(1)(a) of the Constitution and effectively place Nelson Mandela Bay under administration.

The announcement was made by Eastern Cape cooperative governance and traditional affairs MEC Xolile Nqatha in a statement on Monday.

Nqatha said, “the Eastern Cape Provincial Executive Council took a resolution to invoke the provisions of section 139(1)(a) of the Constitution to intervene in the municipality.”

He revealed that the move to place the metro under administration is being challenged by the municipality.

“The Deputy Executive Mayor purportedly acting on behalf of the municipality instituted an application in the Grahamstown High Court challenging the intervention. The application was dismissed with costs. The Deputy Executive Mayor has now made an application for leave to appeal. The application for leave to appeal is opposed by the provincial government and has also filed a counter application in this regard,” said Nqatha.

The statement also claimed that the municipality has to date failed to develop a clear plan with set dates on the process to implement all that has been recommended by auditing firm Deloitte & Touche and National Treasury.

This comes as more than R1 billion of grant funds meant for the municipality are being withheld by National Treasury due to the municipality’s non-compliance with National Treasury guidelines, revealed Nqatha.

Nqatha said R753.8 million of the money was meant to be allocated in the last quarter of the 2019/2020 financial year, while R498 million was for the first quarter of the 2020/2021 financial year.

National Treasury is empowered by Section 216(2) of the Constitution to stop the transfer of funds (conditional and non-conditional grants) to any organ of state that commits a serious or persistent breach of the measures prescribed to promote transparency, accountability and the effective financial management of the economy, debt, and the public sector.

The metro has been without a permanent mayor since the UDM’s Mongameli Bobani was removed through a vote of no-confidence on 5 December. Bobani was removed after his alliance with the ANC and other smaller parties fell apart, News24 reported.

The metro has still not appointed a permanent mayor, despite the fact that the Nelson Mandela Bay council speaker Buyelwa Mafaya was ordered by the Port Elizabeth High Court in August to call a council meeting within seven days to elect a mayor and appoint an acting city manager.

In a 16 June letter to President Cyril Ramaphosa, the Nelson Mandela Bay Chamber of Business, the largest organised business group in the Eastern Cape, warned that without a mayor to table its Budget, the metro may lose its equitable share.

The chamber said this will have devastating effects.

Nqata further announced that The United Front has now instituted an application in the Grahamstown High Court seeking an order declaring the impending action of National Treasury – to withhold the municipality’s equitable share – as unlawful and unconstitutional.

“The United Front has now instituted an application in the Grahamstown High Court seeking an order declaring the impending action of national treasury to withhold the municipality’s equitable share unlawful and unconstitutional,” revealed Nqata.

United Front councillor and acting member of mayoral committee for Budget and Treasury Mkhuseli Mtsila confirmed the court application.

“Indeed the UF have approached the Grahamstown High Court. Our view is that withholding equitable share and other conditional grants payable to the municipality will negatively affect the citizens and reduce the capacity of the municipality to deliver essential services to the poor areas in the Nelson Mandela Bay Municipality. In addition, this is also informed by the fact that 45% of our capital revenue for these grants is externally generated.”

In an emailed response to News24, National Treasury said: “Please note that National Treasury is dealing with this matter and is therefore, unable to respond at this time until the matter is concluded.”

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