Cape Town: National government will allocate R105 billion in grants to municipalities over the next two years for free basic services such as water, sanitation, electricity and refuse removal.
Six metropolitan municipalities have also been targeted for a new grant of R300 million per year to build their capacity to plan integrated human settlements.
Tabling his fifth Budget Speech in Parliament on Wednesday, Finance Minister Pravin Gordhan said the integrated city development plans would strengthen long-term city planning and encourage private investment in urban development.
The grant will have R814 million over the next three years.
A further R108 million will be made available as part of human settlements development grant earmarked for housing upgrades in mining towns. Government has also set aside R900 million in the coming financial year to upgrade sanitation infrastructure.
Local government raises revenue in the form of charges and taxes and as a result only 27% of their spending is financed through the division of revenue. However, significant disparities in the municipal tax base have meant that national transfers are important for poor and rural municipalities.
Of the R105 billion grants, 44% will go to metropolitan municipalities and 32% to the 70 most rural local municipalities and the district municipalities that provide services to rural areas.
The Treasury’s budget documents indicate that while much has been achieved in the rollout of municipal infrastructure over the last decade, significant work remains to be done, both to eradicate backlogs and to ensure services are properly maintained over the long term.
Gordhan said the assignment this year of the human settlements function to metropolitan municipalities was a vital intervention in speeding up housing investment and integrated urban development.
Metropolitan and larger urban municipalities are expected to use a combination of grant funds and their own revenue to upgrade informal settlements.
In the 2013/14 financial year, government introduced the integrated city development grant which provided a financial incentive for metropolitan municipalities to concentrate infrastructure funds on more compact urban environments. An addition R356 million will be allocated to the grant, bringing its value to R814 million.
Over the next two years, R1.9 billion will be spent on eradicating the bucket system and R15.4 billion is earmarked for regional bulk infrastructure over three years.
SOURCE: South African Official News