Human settlements projects in Nelson Mandela Bay have stalled and remain incomplete until the next financial year due to grant underspending and insufficient funding from the Eastern Cape department of human settlements.
The withholding of grant funding left the department unable to complete some of its projects approved in its business plan.
A report prepared by former human settlements executive director Tabiso Mfeya was meant to be tabled at a May 7 committee meeting, which was later postponed.
Mfeya’s contract with the municipality ended on April 30, leaving the department without an executive director — one of the reasons for the postponement.
The report was a status update on projects funded through the human settlements development grant in collaboration with the provincial department, which developed a business plan outlining projects earmarked for implementation for the 2025/2026 financial year.
The plan has the potential to deliver about 1,875 new housing units.
“The reduction in funding by the Eastern Cape department of human settlements has resulted in several projects included in the current business plan not being implemented,” Mfeya’s report reads.
“Subject to the availability of sufficient funding, these projects will be carried over to the next financial year’s business plan.
“It should further be noted that the implementation of projects remains contingent upon the level of funding allocated to the Nelson Mandela Bay Metropolitan Municipality.
“The continued decline in funding provided to the municipality in its capacity as an implementing agent is adversely affecting the execution of project-ready initiatives.
“In light of the persistent housing backlog, coupled with the limited number of units delivered annually, the current funding trajectory significantly constrains the municipality’s ability to meaningfully reduce the backlog, particularly as demand continues to grow each year.
“This underscores the need to explore and consider alternative approaches to the provision of shelter.”
The provincial department confirmed a total allocation of R108.03m to the metro on May 22 2025.
However, only R43m, representing 39% of the allocated amount, was transferred to the city.
According to Mfeya’s report, the province requested the city to refund unspent funds on March 31.
“The rationale provided was that, in terms of the auditor-general’s interpretation, funds transferred to implementing agents or developers but not expended by the end of the provincial financial year are classified as unspent and must be returned to the national fiscus.
“To avert the latter, the Eastern Cape department of human settlements initially requested a refund of R18.7m, and an agreement was subsequently reached to transfer back an amount of R8.26m.”
This was done on the understanding that the municipality would reclaim the funds in April 2026.
“Claims in this regard have already been submitted and are currently awaiting payment, as they relate to completed housing units.”
The funds in question are linked to a single project in Motherwell NU30.
Six other projects funded by the provincial grant have been completed.
During a parliamentary appearance in 2025, the department came under fire for its low expenditure on its grants.
It emerged that the National Treasury withheld the informal settlements upgrading partnership grant (R23.7m) and the urban settlements development grant (R129.8m).
According to the committee report, capital spending stood at 18.5% of the allocated R131.29m budget at the end of March.
The funding was allocated for the installation of water, sanitation and roads infrastructure, as well as the development of 800 serviced sites across various projects in the municipality.
The urban settlements development grant-funded projects are in KwaNobuhle, Jachvlakte, Walmer Airport Valley and others.
The informal settlements upgrading partnership grant projects are in Motherwell and Bethelsdorp.
Mayor Babalwa Lobishe said the metro faced a serious housing backlog, worsened by people building homes in areas not approved for housing development.
“People just wake up and stay wherever they want to,” Lobishe said.
" In terms of regulations, there must be an environmental impact assessment.
“Last year, we conducted an exercise going to all the settlements we have to try and quantify who needs housing, and the applications were more than 15,000 for new houses, let alone the backlog of houses, which at this stage is sitting at [about] 11,000 and let alone the rectification backlog.”
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