National Treasury plans to stop R384 million in funding to the cash-strapped Alfred Nzo Municipality due to under-performance and non-compliance relating to water service and municipal infrastructure.

Treasury wrote to its municipal manager, Zamile Sikhundla, in February to inform him it intended to stop the water services and municipal infrastructure grant payments, totalling R384 million, for the 2020/2021 financial year.

The letter, seen by News24, served as a formal notification by Treasury of its intention to stop the allocations in terms of Section 19 of the 2020 Division of Revenue Act (DoRA) and Section 38 of the Municipal Finance Management Act (MFMA).

"Acting on the above, National Treasury hereby informs you of the intention to stop an amount of R14.2 million and R50 million from your original 2020/21 WSIG [water services infrastructure grant] and MIG [municipal infrastructure grant] allocation of R94.9 million, and R368.7 million in terms of Section 19 of the 2020 DoRA. This decision will not in any way affect future allocations to your municipality," the letter read.

Treasury is empowered by Section 19 of DoRA to withhold funding or a portion thereof to a municipality if it anticipates that it shall substantially under-spend on the allocation or programmes.

The local government authority is in hot water after it used less than 40% of its budget for 2020, despite being one of the poorest districts in the Eastern Cape.

Catastrophic impact

The municipality is responsible for water provision to the Ntabankulu, Mbizana, Matatiele and Umzimvubu local municipalities.

The DA warned withholding the funds would have a catastrophic impact on communities in the Alfred Nzo region, where residents are already being deprived of their basic human right to clean drinking water. Several other projects will be impacted in the Mbizana Municipality, including the Bizana Water Scheme in Bizana which will not be completed. In the Umzimvubu Municipality, residents in Ncome, Gxaku, Luyemgweni and Ambrose might be without water for another five years.

In the Matatiele Municipality, Fobane, Mangolong and Thafa will also not have fresh drinking water until 2024, and Ngcwengane, Sifolweni and Phamlavile will not benefit from the completion of a R86 million water scheme to the area. Mahlake, Purutle, Zingcuka and Ramafole in the Matatiele local government will now not see any new project for water provision until 2027. In the Ntabankulu Municipality, Bhakubha, Bhonxa and Dlantaka will also have to struggle on without running water due to the funding cuts.

"The DA will submit a motion in council to demand that the municipality make its response to National Treasury available, and that a full breakdown on why Alfred Nzo was unable to spend their funding be made available.

The DA will continue to hold this municipality to account and fight for the rights and dignity of the people of the Alfred Nzo District Municipality." According to the party, the municipality had known its failure to act could result in it losing the funding. During the 2019/2020 financial year, Treasury withheld an initial R48 million, also due to its poor performance and under-spending.

The DA's provincial chair and Alfred Nzo Municipality councillor, Wonga Potwana, said it was unfortunate the ANC of today only cared about their pockets and comrades.

"How can one of the poorest municipalities in the Eastern Cape fail to spend money for water, while we know the importance of this service in this municipality?

"As the Democratic Alliance, we are saddened by this behaviour and those who failed to do their jobs must be shown the gate.

I feel sorry for voters, who trusted and believe the ANC will deliver services, but they only delivered cadres to positions they are not qualified to hold," Potwana added.

The municipality was requested to motivate to Treasury, among others, why expenditure reported as at 31 December 2020 was below 40%, to provide a progress report on approved projects and make representation on the initial cash flow projections against actual performance as well as a declaration by the municipality on the amount that should be stopped by Treasury.

Sikhundla and Mayor Sxolile Mehlomakhulu could not be reached for comment. Their responses will be added once received.