The report on local government revenue and expenditure for the second quarter of the 2024/25 financial year shows that conditional grants were underspent by municipalities, National Treasury said on Friday.
These grants were allocated for programmes to support the development of infrastructure, fund emergency repairs after unforeseen disasters, fund the implementation of electrification projects, fund the upgrade of informal settlements as well as developing bulk water and wastewater infrastructure.
"Six of the infrastructure grants have underperformed, with expenditure falling below 40% of their allocated budgets. The Municipal Disaster Recovery Grant (MDRG) reported an expenditure of just 16.9%, while the Integrated National Electrification Programme (Municipal) Grant (INEP) had an expenditure of 38.4%.
"The Metro Informal Settlements Partnership Grant (ISUPG) showed an expenditure of 34.7%, the Neighbourhood Development Partnership Grant (NDPG) had 33.2%, the Public Transport Network Grant (PTNG) reported 22%, and the Rural Roads Assets Management Systems Grant (RRAMS) stood at 28.8%," Treasury explained.
The report covers the performance against the adopted budgets of local government for the second quarter of the municipal financial year ending on 31 December 2024 and includes spending against conditional grant allocations for the same time frame.
"The MDRG, in particular, demonstrated significant underperformance in the second quarter of the previous financial year, with an expenditure of only 16.9%. This grant has consistently underperformed in recent years, with little improvement, indicating ongoing challenges in its effective utilisation by municipalities.
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"The Integrated Urban Development Grant (IUDG) and the Municipal Infrastructure Grant (MIG) were the best-performing grants in this quarter, maintaining their strong performance from the first quarter. The IUDG recorded an expenditure of 52% against a total allocation of R1.1 billion, while the MIG achieved 54.9 % of its R17 billion allocation," National Treasury said.
The Department of Water and Sanitation grants, which administers the Regional Bulk Infrastructure Grant (RBIG) and the Water Services Infrastructure Grant (WSIG), also showed positive performance, albeit at lower expenditure rates compared to the second quarter of the 2023/24 financial year.
However, overall grant performance this quarter was poor compared to the same period in the previous financial year.
As of 31 December 2024, municipalities were allocated R44.1 billion for direct conditional grants, of which R28.2 billion has been transferred.
The National Transferring Officers (NTOs) reported spending of R18.4 billion, or 41.7 %, while municipalities reported spending of R12.8 billion, or 29.1% of the total allocation.
"As at 31 December 2024, aggregate spending by municipalities was 44.2 % or R287.5 billion of the total adopted expenditure budget of R649.9 billion. Aggregated billing and other revenue was 49.9 % or R325.5 billion of the total adopted revenue budget of R652.3 billion.
"Capital expenditure amounts to R14.3 billion or 18.4% of the adopted capital budget of R77.4 billion. The adopted operating expenditure budget amounts to R572.5 billion, of which R273.2 billion (47.7%) was spent by 31 December 2024," National Treasury said.
