SECTION A $[100$ MARKS$]$ Read the case study below and answer ALL the questions that follow.

Treasury warns Tshwane R$629$m grants in danger. Underperformance and noncompliance behind the decision.

National Treasury is threatening to withhold millions of rand in development allocation grants for Tshwane, while at the same time residents are unhappy with poor service delivery in the municipality.

Image: ANTONIO MUCHAVE

$14$ February $2024-07$:$00$

Jeanette Chabalala SENIOR REPORTER.

The City of Tshwane stands to lose about R$629$m in development allocation grants if it fails to convince the National Treasury not to stop the funds.

In a letter dated February $12,$ which Sowetan has seen, Treasury listed several grants that would be affected, citing underperformance$/$noncompliance and has given Tshwane seven days to respond. Treasury deputy director$-$general Malijeng Ngqaleni has proposed that a portion of the $2023/24$ allocation to Tshwane in respect of the programme and project preparation support grant $($PPPSG$)$ and urban settlement development grant $($USDG$)$ be stopped.

The decision will also affect the public transport network grant $($PTNG$),$ informal settlement upgrading partnership grant $($ISUPG$)$ as well as the neighbourhood development partnership grant $($NDPG$).$

The letter reads in part: $...$the National Treasury hereby informs you of the intention to stop an amount of R$14\mathrm{.}4$m from your $2023/24$ PPPSG allocation of R$62$m$,$ R$391,4$m from your $2023/24$ USDG allocation of R$978\mathrm{.}5$m$,$ R$85$m from your $2023/24$ PTNG allocation of R$830\mathrm{.}3$m$,$ to stop an amount of R$102,8$m from your $2023/24$ ISUPG allocation of R$619\mathrm{.}8$m$,$ and to stop an amount of R$36$m from your $2023/24$ NDPG allocation of R$155\mathrm{.}4$m in terms of section $18$ of the $2023$ DoRA. This decision will not in any way affect future allocations to your municipality$.$

City manager Johann Mettler confirmed that he received the letter and said it was $$not a done deal$.$We are still engaging National Treasury in terms of the issues raised in the letter, with a return date of Friday. So$,$ it is too early to speculate as to which projects may be affected,$$ Mettler said.

Ngqaleni asked Tshwane to motivate why the expenditure that was reported on December $312023$ was below $40\%.$ Treasury also wants a progress report against approved projects, a representation of the initial cash flow projections against actual performance among other things. $$Please be advised that in terms of the section $38(2)($a$)$ of the MFMA $[$Municipal Finance Management Act$]$ you are required to submit, within seven days upon receipt of this letter, a written representation to the National Treasury regarding the proposed stopping of the allocation in question,$$ Ngqaleni said.

Treasury$$s move comes as the mayor of Tshwane Cilliers Brink announced plans to increase revenue and reduce expenditure in the range of R$1$bn a month for the next six months.

$$There is simply no other way to unlock the needed resources and drive performance. What we have to our advantage is a R$233$bn debtors$$ book that we aim to turn into cash. $$If a quarter of this debtor$$s book is collectable, it is collectable in the next six months. If we succeed, we improve our cash flow, our Eskom account as well as our credibility and creditworthiness,$$ Brink told Sowetan$$s sister publication Times LIVE this week.

The city has been beset by poor service delivery issues and crumbling infrastructure which have crippled the capital over

the years.

Hellen Kgobo, the founder of the Tshwane Service Delivery Association in Soshanguve, said she was "unhappy" with Tshwane's service delivery.

"Tshwane is so dirty. We don't see the municipality cleaning as often as before. Sometimes they collect rubbish bins and sometimes they don't collect or they use small vehicles, we just don't understand what is happening. "Driving around the townships you will also see sewage and the smell is just unbearable. As the ANC and DA are fighting for power the community continues to suffer.

"There are illegal water and electricity connections in some parts of Tshwane and some of us residents suffer because of these and we end up paying more for tarriffs."

Oupa Mtshweni, the leader of the Mamelodi Concerned Residents for Service Delivery, told Sowetan they would often spend three days without water in their area.

"They don't even communicate with us that we won't have water $[$and$]$ sometimes we wake up to no water. "The billing system is also confusing because they would sometimes overcharge some residents and they don't send receipts, but they know how to send final demands."

QUESTION $1$

$1\mathrm{.}1$ Explain the implications of the proposed grant stoppage on the City of Tshwane in the context of public sector financing.

$1\mathrm{.}2$ Discuss the differences between public sector and private sector financing models and how they apply to the City of Tshwane.

$1\mathrm{.}3$ Elaborate on how the public service concept applies to