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The 2019/2020 budget and how it affects human settlements

Isandla Institute | 2019-03-19 | 0 comments

On 20 February 2019 Finance Minister Tito Mboweni tabled the 2019/2020 budget, his first budget vote since his appointment last year. The budget message over the past few years has been for government officials to do more with less. So what does the 2019/2020 budget have in store for human settlements, and informal settlement upgrading specifically?

The 2019/2020 Budget is premised on the Minister of Finance’s analogy of a farmer who reaps and sows. This implies putting in, in order to get out. First, it is important to establish that the national Department of Human Settlements is responsible for more than just housing. As defined in the Breaking New Ground strategy of 2004, sustainable human settlements have to do with many aspects of human life from shelter to socio-economic aspects such as education, recreation, access to jobs and health facilities [1]. This implies that the Department plays a coordination role for a range of services. Second, a number grant transfers that are provided by the National Treasury to local government are focussed on improving the lives of the previously marginalised and low income households [2].

Last year’s budget saw a cut in a number of grant allocations, specifically the Human Settlements Development Grant (HSDG), Urban Settlements Development Grant (USDG), allocations to the Social Housing Regulatory Authority (SHRA), the Capital Restructuring Grant, Municipal Infrastructure Grant (MIG), Integrated National Electrification Programme (INEP) conditional and indirect grants, and the Public Transport Network Grant (PTNG). These grants are generally designed to positively impact the lives of vulnerable households in the context of providing access to decent shelter, general infrastructure, basic services, and subsidised transport among others. At the time, these cuts were expected to negatively affect infrastructure projects and cause delays in service delivery [3].

The 2019/2020 budget allocations paint a relatively positive picture compared to last year. To begin with, the National Department of Human Settlements has been allocated R105.7 billion [4] over the Medium Term Expenditure Framework (MTEF, from 2019/2020-2021/2022) for the provision of more than 520 000 state-provided housing subsidies [5]. The latest allocation of R101.8 billion is an increase of R3.9 billion (or 4%) from last year [6].

In relation to transfers, there has been a general increase in all grants such as the Integrated Urban Development Grant (the IUDG is a grant for secondary cities to provide infrastructure) over the MTEF partly due to R2.9 billion reprioritised from the MIG. The Capital Restructuring Grant to the SHRA is gradually set to increase over the MTEF. With regard to the transport sector, both the PTNG and allocations to the Passenger Rail Agency of South Africa (PRASA) are increasing. This is potentially beneficial to public transport users, specifically low income households in urban peripheries and who already spend large portions of their wages and salaries on public transport [7]. In 2019/2020, the HSDG has increased by R513 million but will decrease over the MTEF. From 2020/2021, part of the HSDG is being reprioritised to form a new grant called the Informal Settlements Partnership Grant (ISPG), totalling 14.7 billion. The target it is to upgrade 231 000 households in informal settlements from 2019/2020-2021/2022 [8]. Allocations of the INEP are continually declining as funds from this grant are being reprioritised to the USDG for electrification of informal settlements [9]. Overall, these allocations suggest a positive outlook for informal settlements upgrading initiatives.

However, increased funding needs to be accompanied by effectiveness and efficiency in spending and the data suggests that government struggles in this regard. In 2016/2017 there was underspending of the HSDG by major metros (City of Cape Town, Johannesburg and Ekurhuleni) [10]. In the following year provinces were found to have spent the HSDG on programmes that were not planned for, while under-performing on planned programmes - a costly planning challenge [11]. In 2018/2019, the National Department of Human Settlements spent 99% of its budget but only achieved 77% of targets [12]. This suggests that the Department has some way to go to improve its capacity to deliver services to those in need of adequate housing and basic services.

In conclusion, the 2019/2020 National budget contains increases in allocations that can directly impact the lives of low-income and informal settlement residents. It is, however, the quality of life and lived experiences of informal settlement residents that will prove if the increased allocations are making a significant impact. These impacts can only be effective in the context of meaningful community participation, municipal officials well capacitated in both the technical and social aspects of upgrading, and partnerships between all stakeholders, including NGOs and the private sector.

Sources

[1] National Department of Human Settlements. 2004. Breaking New Ground: a comprehensive plan for the development of sustainable human settlements. Available at http://www.thehda.co.za/uploads/files/BREAKINGNEWGROUNDDOCcopy-21.pdf
[2] Republic of South Africa. 1996. Constitution of the Republic of South Africa. Schedule 4, Part B and Schedule 5, Part B.
[3] National Treasury. 2018. Budget review 2018, p.53
[4] National Treasury. 2018. Budget review 2018
[5] National Treasury. 2019. Budget review 2019
[6] National Treasury. 2019. Estimates of National Expenditure 2019
[7] Venter, C. 2011. Transport expenditure and affordability: The cost of being mobile. Development Southern Africa 28(1):121-140. Available at: https://repository.up.ac.za/bitstream/handle/2263/16529/Venter
Transport(2011).PDF?sequence=1
[8] National Treasury. 2019. Budget review 2019
[9] National Treasury. 2019. Estimates of National Expenditure 2019
[10] Parliament. National Council of Provinces Social Services Committee. 2017. Department of Human Settlements 2016/17 Annual Report Meeting. 28 November 2017. Cape Town: Parliament.
Available at https://pmg.org.za/committee-meeting/25601/?utmcampaign=minute-alert&utmsource=transactional&utm_medium=email
[11] Parliament. National Council of Provinces Appropriations Committee. 2018. Human Settlements Grant 2017/18 Quarter 4 performance: Hearing, with Deputy Minister. 06 June 2018. Cape Town: Parliament.
Available at https://pmg.org.za/committee-meeting/26588/
[12] National Treasury. 2019. Budget review 2019

Written by Martha Hungwe, Isandla Institute



Slum upgrading remains the most financially and socially appropriate approach to addressing the challenge of existing slums. UN Habitat (A Practical Guide to Designing, Planning, and Executing Citywide Slum Upgrading Programmes 2015 (PDF), page 15)

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