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Treasury concerned that one-third of municipalities need help

Cape Town – National Treasury said close to one-third of municipalities in South Africa is in financial distress. 

Treasury highlighted this in a presentation on the 2016 Division of Revenue Amendment Bill made to a joint meeting of members of Parliament who belong to Finance Portfolio Committees on Thursday.

Earlier, the South Africa Local Government Association (SALGA) in a presentation to Parliament's Select Committee on Appropriations cautioned MPs that 92% of municipalities required intervention, but National Treasury said the figure was closer to one-third. 

Total allocations to local government through the Division of Revenue and sharing of the general fuel levy with metropolitan municipalities will amount to R104.9 billion in the 2016/17 financial year, Treasury said in its presentation.  


National Treasury said the changes in the adjustment budgets to provinces and local governments are “relatively small” and include unforeseeable and unavoidable expenditure, emergencies and the utilisation and rollover of unspent funds.

Treasury was however concerned that municipalities’ debt to Eskom and water boards was on the increase. In August this year, Eskom CEO Brian Molefe told Parliament that the outstanding debt from municipalities totalled R10.8bn.

Allocations made to local governments through National Treasury’s conditional grants framework include R50.6m for municipal water service infrastructure to support emergency water supplies in drought-affected communities.

An additional R72m will be allocated towards the bucket eradication programme. The Department of Water and Sanitation in June said it’s aiming to remove South Africa’s bucket toilet system within the next two financial years.

Provincial allocations

The amendment to the Division of Revenue Act makes provision for, among other things, a rollover of R275.7m for roads maintenance in KwaZulu-Natal. The funds were not transferred in the 2015/16 financial year, as the province failed to meet the requirements for the grant. “The province however has met the requirements subsequently,” National Treasury said.

An extra R212m will be added to provinces to provide relief for farmers who are affected by the ongoing drought, while R177.1m has gone towards the fixing of damaged school infrastructure.

National Treasury has also added R9m to the direct national health insurance (NHI) grant to improve health information systems in KZN and the Western Cape. Treasury said the allocation was part of the groundwork in the pilot phase of the NHI programme.

         
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