1. 2016/17 STOPPING & REALLOCATION CONSIDERATIONS: OR Tambo District Municipality
06 June 2017

2. BACKGROUND
On the 13th January 2017, the Province (EC) was invited by national department of Co-operative Governance (DCoG) to the session scheduled for 19th & 20th January 2017 in Pretoria with thirteen (13) underspending municipalities on Municipal Infrastructure Grant (MIG) during 2016/17 FY based on their performance report as at 31st December 2016.
An amount of R million was potentially going to be stopped in EC municipalities, of which R million was from O.R.Tambo district municipality.
Subsequent to the invitation, PT & COGTA met on 16th January 2017 and agreed to facilitate a joint session with all affected municipalities on the 17th January 2017 in East London.
O.R. Tambo was amongst municipalities which were invited by Province to the joint session held on 17th January 2017 in preparation for 19th and 20th January 2017 session with DCoG in Pretoria, however O.R. Tambo District Municipality did not attend the provincial session.

3. STOPPING & REALLOCATION 2016/17 MIG ALLOCATIONS
In terms of MIG Framework 2016,
Municipalities must:
spend at least 60% of the first transfer (by October 2016)
spend at least 40% of their total MIG allocation by December 2016
must comply with reporting provisions before the transfers are made.
If not, the Transferring Officer (TO) may evoke stopping and reallocation procedures (in terms of Sec. 19 & 20 of the DoRA 2016)
The MIG transferring officer’s (DCOG) report confirmed that O.R. Tambo’s cumulative expenditure was R million or 22% as at end December 2016 of total allocation of R million, resulting in the municipality falling below the 40% bracket of stopping, hence R million was intended to be stopped.
Two Senior officials from the Province (PT & COGTA) accompanied the identified municipalities with potential stoppage of the MIG in Pretoria on the 19th and 20th January 2017.
O.R.Tambo delegation (CFO & PMU Manager) did not prepare any formal presentation on 19th January 2017 sighting that, they were unaware of what was expected from them.
It was resolved that O R Tambo be given a second chance the following day (20th ) and be assisted by MISA assistant as they did not have any information on what to be presented

4. STOPPING & REALLOCATION 2016/17 MIG ALLOCATIONS CONT…
O.R. Tambo was given a second chance on the 20th January 2017, however the municipality did not have sufficient or adequate information like proof of payments and projects implementation plan to convince the panel that they had spent more than 40% in December 2016 for the intended purposes.
All municipalities were expected to submit a file with the following documents:
Proof of payment for projects on signed project implementation plan (DCOG further confirmed that O.R.Tambo implemented projects that were not in the project implementation plans submitted to DCOG)
Letters of appointment of service providers to commit funds as allocated and
Realistic cash flow projections.
Out of the 13 affected municipalities 5 have been eliminated from stopping due to their cooperation as from 17th January 2017 to 20th January 2017.
DCOG had further scrutinized all supporting documents and share with the Province the final outcomes of stopping, then submit to National Treasury for implementation.

5. PROVINCIAL OVERVIEW OF STOPPING & REALLOCATION 2016/17 MIG
Out of the R2 956 billion MIG allocation for 2016/17 to EC, R million was stopped from 8 underperforming municipalities and R million was reallocated to 11 municipalities in the province 
Municipality
Allocation /17 (R'000)
Transferred (R'000)
Spent by December 2017
Spent as % of total available
Spent as % of total transfers
Stopped (NT) /17 (R'000) 1.
Sundays River V.
24,446
21,711
3,273
13%
15%
2,735 2.
Kou-Kamma
14,694
5,320
2,774
19%
52%
3,000 3.
Amahlathi
30,147
20,465
5,444
18%
27%
7,000 4.
Ngqushwa
21,854
17,889
5,022
23%
28%
2,379 5.
Emalahleni
31,758
13,754
4,042
29% 6.
Engcobo
50,431
27,229
2,921 6%
11%
4,000 7.
Sakhisizwe
17,539
9,993
3,186
32%
3000 8.
O.R. Tambo DM
609,099
375,457
132,090
22%
35%
90,000
TOTAL EC STOPPED
799,968
491,818
158,752
20%
119,114

6. NATIONAL OVERVIEW OF STOPPING & REALLOCATION 2016/17 MIG
Out of the R14,9 billion MIG allocation for 2016/17 in the country, R943 million was stopped from 42 poor performing municipalities and reallocated to 58 municipalities across the country.
PROVINCE
ALLOCATION
STOPPING
REALLOCATION
GAIN/LOSS
REVISED ALLOCATION EC
5 621 FS
47 500
14 332 GP
-7 800 -
KZN
74 100
21 630 LP
( ) MP
97 200
29 355 NC
68 500
43 956 NW
64 706 WC
-6 054
6 429
375
Total

7. STOPPING & REALLOCATION 2016/17 MIG ALLOCATIONS CONT…
After the exercise from the province in January 2017, National Treasury further informed O.R. Tambo of intention to stop MIG funds on 16 February 2017 and request the municipality to respond to the letter.
Municipality still did not convince National Treasury in order not to stop MIG funds, hence R million was ultimately stopped, Gazette No Vol. 621 dated 22 March 2017 was then issued for stopping and reallocation of MIG
A follow-up session was done by ECPT, COGTA, NT and DCOG 16th May 2017 to assess progress on MIG spending as the indication of underspending.
An engagement by the stakeholders mention above was held on the on 25th May 2017, to discuss a wayforward and readiness assessment for 2017/18 Implementation Plans seeing that still munis are grossly underspending  on MIG

8. RECOMMENDATIONS
To avoid discrepancies in reporting the following should be adhered to;
Improvement of reporting within the three government spheres.
Municipality must comply with MIG framework (reporting).
The critical technical post must be filled
Planning & procurement must done in advanced (plan a year before implementation year)
Provision of adequate financial resources is necessary to enhance monitoring and support to municipalities.

9. Thank you