Withholding of Municipal Human Settlements Capacity Grant (MHSCG)

The Ministry of Human Settlements notes with regret the recent media reports on the statements by the City of Cape Town MMC for Human Settlements Ms. Van Minnen accusing the Department of Human Settlements of withholding the R13.7 million capacitation grant.

We note with regret that the representatives of the City of Cape Town has chosen to resolve matters related to the witholding and release of the grant, without first resolving its disatisfaction through the current available intergovernmental and legislative means available to the Municipality.

The National Department of Human Settlements has the responsibility as the disburser of the MHSCG to ensure that the funds transferred to municipalities are utlised for the purposes and within the stated timeframes as contained in the various policy, legislative and regulatory frameworks. The Department has the responsibility to holds all spheres of government accountable for expenditure of conditional grants. The MHSCG is one such conditional grant in the human settlements and housing “family’ of grants.

It is to be noted that the Department is not “targeting” the City of Cape Town but has requested all Metropolitan Municipalities to account for not only expenditure but targets and outputs for which such expenditure has been incurred. In terms of the Division of Revenue Act, the Department can institute measures to withold grants where the receiving municipality is not able to justify expenditure and related outcomes, and this is exactly what the Department is requesting not only of the City of Cape Town but all Metropolitan Municipalities which receives the MHSCG.

The step the Departement has taken is but the first step in a process which may or may not result in the grant being witheld, pending the response of the Municipalities. It thus appears that MMC Van Minnen has “jumped” the gun, and should rather focus of providing the Department with the necessary justification why the payment for 2015/16 should be made not to only the City of Cape Town but all Municipalities. It must be noted that the Department indeed did make payment of the 2014/15 MHSCG amount due to the City of Cape Town and this amounted to R50.3m. The City of Cape Town has of this amount only spent R18m and hence the Department taking the stance it has, but again with not only the City of Cape Town but all Metropolitan Municipalities.

The MHSCG is also but one of three human settlements grants that the It must be noted that the Department of Human Settlements during the course of the 2014/15 financial year transferred an amount of R1.3bn to the City of Cape Town with regards to the Urban Settlements Grant as well as an amount of R50.7 for the MHSCG. The City of Cape Town was also earmarked to receive R776m out of the Human Settlements Development Grant, which is also a grant managed by the Department.

Thus it is hoped that the actions of the Department must not be construed as “victimisation” but one which is fair, just and equitable and in the national financial interests of fiscal discipline, accountability and responsibility. Our current fiscal environment is constrained and we all need to esure we account for government funding in a responsible and disciplined manner.

Ndivhuwo Mabaya at 083 645 7838
Issued by the Ministry of Human Settlements

Press Release Date: 
Tuesday, August 25, 2015