Budget cuts to the department of human settlements have resulted in recurring delays in contractor payments, further stalling delivery. This was revealed in a parliamentary question by ANC MP Betty Motebele Kegakilwe. She asked how the department plans to address the recurring delays in contractor payments to prevent project stagnation.

Human settlements minister Thembisile Simelane responded by detailing the financial challenges faced by North West. The NW provincial department was allocated an initial budget of R1.73bn for the 2023/24. But the department’s budget was cut by R213m, resulting in the total adjusted budget being R1.515bn.

The province had already taken steps to revive stalled housing developments, she said. “The budget cuts occurred after the provincial department had already decided to unblock several projects; the implication is that several contractors were appointed to unblock the first 600 units of the blocked projects.”

The timing of the cuts compounded financial strain within the department, she added. “At the time of budget cuts in October 2024, the department had already finalised contracting for the above-mentioned projects.

“The provincial department started the 2025/26 financial year with accruals and payables amounting to R496m, which had to be paid from the 2025/26 budget allocation, resulting in the inability to pay all service providers within 30 days.”

Due to the significant accruals a large portion of the new financial year’s allocation had to be used to settle outstanding invoices, placing further pressure on cash flow and delaying payments to service providers, added Simelane.

Reprioritising spending

To manage the situation, the province has begun reprioritising its spending. “The provincial department is currently reducing commitments by cutting appointments for new projects and allocating 80% of the budget to current active and blocked projects, with only 20% to new projects,” said Simelane.

Structural challenges relating to bulk infrastructure have also contributed to blocked housing opportunities. “The department has adhered to a request by the province to amend their 2025/26 financial year approved business plan with the main aim of addressing the acute shortage of bulk provision to most municipalities in the province as this will unlock most blocked housing opportunities.

Despite the fiscal constraints, provinces are still required to comply with payment regulations. “Provinces are advised to adhere to the 30-day invoice payment for the goods and services rendered, and this is at the back of cabinet-approved budget cuts.

“Several sessions have been used to highlight the implications of budget cuts, and therefore the provinces are expected to reprioritise projects within their baseline allocations.”

The province has committed to focusing on projects already underway. The province has also indicated its plan to prioritise active projects, an initiative that the national department has undertaken to assist provinces with budget cuts, she said.

OFM News/Kekeletso Mosebetsi sm