R463-million in low-cost housing grants to be moved from under-performing provinces

18 Jan 2011

A total of R463-million in human settlements grant funding is to be moved from two under-performing provinces to two which have met their delivery targets and require additional funding.

This was announced in Pretoria today by Human Settlements Minister Tokyo Sexwale, having applied his mind in line with a decision taken by all nine provinces at a MinMEC - a statutory meeting of the Minister and the provincial MECs for human settlements -- on 19 November 2010.

A total of R263-million is to be moved from Free State, and R200-million from KwaZulu-Natal. The funds will be reassigned as follows:

• R182-million to Northern Cape, primarily for the construction of 2 070 new houses across the province, at a cost of R178-million, as well the upgrade of 350 units in informal settlements at an estimated cost of R78-million. The remainder of the funds will be used for integrated residential developments.

• R131-million to Limpopo, primarily for the construction of 5 300 houses in 17 districts as part of the province's Rural Housing Programme.

The remaining R150-million has been allocated to the National Rectification Programme which involves repairs to badly-built houses in various provinces.

"Two provinces which were earlier in the group of four under-performers - Western Cape and Eastern Cape - remain on my watch-list and their performance will be closely monitored," Minister Sexwale said. "We still expect that, by the end of the administration's term, all provinces will by and large have met their targets.

"It is important to note that the R463-million remains in the housing delivery process, and will be used to contribute directly to addressing the housing backlog and the needs of the poor - rather than being rolled-over and/or returned to National Treasury."

Background and context

14 Oct 2010: Monitoring by the national department, six months into the financial year, shows significant problems with expenditure and delivery in four provinces - Western Cape, Eastern Cape, KwaZulu Natal and Free State --- against their monthly delivery targets.

18 Oct: Minister Sexwale holds a teleconference with MECs from all nine provinces to raise concerns at the lack of delivery and under-expenditure. Under-performing provinces are asked to submit "recovery plans" showing how they intend to improve expenditure and delivery.

18 Nov: National Treasury's mid-term provincial expenditure report confirms the human settlements under-expenditure as part of a broad trend of under-expenditure by most provincial governments on capital projects.

19 Nov: Minister Sexwale convenes a MinMEC with all nine human settlements MECs to discuss the problem. MinMEC resolves that funds should be transferred from underperforming provinces to those that are on target and can demonstrate the ability to take on additional funding.

24 Nov: Minister Sexwale briefs the Parliamentary Portfolio Committee on the under-performance and under-spending. He explains that the main reasons are a lack of capacity in provinces - in particular, project management experience - and a lack of bulk infrastructure such as large-scale electricity and water supply projects.

The national department continues to monitor expenditure and implementation of the recovery plans throughout December and early January.

11 Jan 2011: The Director-General of the Department of Human Settlements announces that four provinces still face the prospect of losing part of their grant, and continues to assess progress with "recovery plans".

14 Jan: Provinces submit their expenditure and delivery reports for December 2010 and their projections for January 2011.

18 Jan: Minister Sexwale announces the movement of funds from Free State and KZN to Northern Cape and Limpopo, and the allocation of R150-m to the national rectification programme.

Note: There have been similar transfers of human settlements grants in the past - for example, in the 2009/10 financial year Free State was allocated an additional R100-m which had not been spent by other provinces.

Statement issued by Chris Vick, Special Advisor to Minister Tokyo Sexwale, Department of Human Settlements, January 18 2011

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