Premier steps in to resolve funding crisis at Gauteng social development department

• Gauteng Premier Panyaza Lesufi met with non-profit organisations on Tuesday and promised to speed up payments, reverse budget cuts and fix issues with service-level agreements.
• But some organisations say they are sceptical of whether the Premier’s intervention will have a lasting impact.
• Lesufi had to intervene last year as well to reverse drastic budget cuts and speed up payments, but systemic issues in the Department of Social Development have never been fixed.
• Many organisations caring for vulnerable people have had to close down or cut services because of the funding delays.

Gauteng Premier Panyaza Lesufi met with non-profit organisations on Tuesday. He told them he is directly intervening to solve funding issues with the provincial Department of Social Development.

The department’s adjudication of funding was delayed this year. Many organisations have still not signed service-level agreements for the new financial year, which started on 1 April, while many organisations that have signed agreements have still not received their subsidies.

Shelters, children’s homes and disability organisations are among the organisations that have had to close down or cut services because of the funding delays.

Lesufi vowed on Tuesday to reverse cuts to the department’s budget, pay the subsidies by 24 May, and review the complaints about service-level agreements.

Neither Lesufi nor the Department of Social Development have provided details on where the money will come from to reverse the budget cuts. The department’s spokesperson Themba Gadebe said that the decision will be made by the provincial Treasury.

The department’s budget for non-profits was initially R223-million less for 2024/25 than it was in 2023/24. But Lesufi said on Tuesday the 2024/25 budget would be “restored” from R1.8-billion to R2.4-billion.

It is the second consecutive year that Lesufi has had to intervene. Last year, drastic budget cuts were also reversed at the eleventh hour.

Organisations starved of funds

Organisations GroundUp spoke to are sceptical that Lesufi’s promises will have a lasting impact.

“We’re not holding our breath,” said Adri Vermeulen, director of the South African National Council on Alcoholism and Drug Dependence (SANCA). SANCA’s drug rehabilitation centre in Boksburg has closed because of funding delays, and staff members at some of its other facilities have had to be retrenched.

July Mathebula, who manages House Otto for quadriplegics, told GroundUp that he could not attend the meeting as the organisation did not have money for transport. GroundUp reported on House Otto’s funding issues in March. On Wednesday, Mathebula said they have not been able to buy food or electricity.

House Otto has received no feedback on its funding application, after decades of receiving subsidies from the department. Mathebula said staff members are working without pay.

Mpule Thejane, director of A Re Ageng, which runs several services for survivors of gender-based violence, says the organisation has not received service-level agreements for any of its four programmes.

“Last year we went through the same process of [Lesufi] saying he will pay us our subsidies and he didn’t pay us. He is making impossible promises. Gauteng is big. How will they finish the process by the 24th?” asked Thejane.

Aileen Langley, director of Epilepsy Gauteng, also said they might have to retrench staff.

“We really need transparent communication. If they do for some reason decide not to fund you, they need to give you ample time to responsibly close a centre, to retrench staff,” said Langley.

“You need funding to retrench staff. We feel cynical and that these meetings were really just meant to divide us and make it look good in the media.”

Lisa Vetten, chairperson of the Gauteng Care Crisis Committee, said the Premier’s interventions, last year and this year, have not fixed the systemic issues in the department.

When Vetten and the crisis committee raised the alarm in March about looming budget cuts, social development MEC Mbali Hlophe denied that there were budget cuts and accused Vetten of working with the Democratic Alliance to destabilise the province.

“Finally it is acknowledged that we were not lying about the budget cuts,” Vetten told GroundUp, reacting to the meetings with the Premier this week.

“We were accused of lying to cause panic. There needs to be some apology and recognition that accurate information was not being put out there. The department has denied for long that there is a crisis.”

“Almost collapsed the sector”

Meanwhile the department has launched several forensic audits to investigate corruption in the non-profit sector and appointed external adjudication panels to assess funding applications this year. This appears to have been the main cause of the funding delays. Organisations would usually know by March whether their funding from the department would continue.

The department has not disclosed who the members of the adjudication panels are or how funding decisions were made. GroundUp reported in March that R15-million was diverted from the budget for dignity packs to fund the adjudication panels.

Some organisations are receiving service level agreements for the wrong organisations, and others have received agreements without any indication for which programmes they are meant, according to Vetten.

Vetten said the damage done to the sector will not be solved by Lesufi’s promises.

The forensic audits, adjudication panels, and lack of communication from the department have “almost collapsed the sector”, said Vetten.

Organisations that have depleted their savings and retrenched staff are unlikely to recover.

A planned picket over the department’s mismanagement will go ahead on Friday, said Vetten.

Department comments

Department spokesperson Themba Gadebe told GroundUp that the “funding process took place under a climate of investigations” that caused delays.

Gadebe said that the departure of Head of Department Matilda Gasela at the end of April further delayed matters.

However, Gasela’s departure was not unexpected, as she was appointed on a contract that came to an end in April. While she was department head, control over contractual agreements was centralised, apparently causing a bottleneck in her office.

As GroundUp reported earlier this month, Gasela faces allegations of fraud dating back to her time at the agriculture and the human settlements departments. Despite the Special Investigating Unit recommending her for criminal prosecution, Gasela was appointed to head the social development department.

Lesufi’s promises

Lesufi cautioned organisations on Tuesday that the reversal of budget cuts would not mean that all organisations would receive the full amounts they requested. Some new organisations will also receive funding, Lesufi said.

The department claims it has received more than 1,700 applications amounting to a total of R16.5-billion. Even if the budget cuts are reversed, the department will only be able to spend R2.4-billion on organisations.

Subsidies due to organisations who have signed service-level agreements would be paid immediately, Lesufi said, with finalisation of these payments expected by 24 May. Lesufi said that the provincial treasury had made a special arrangement to enable daily payments.

Organisations who had received service-level agreements from the department had complained about a new clause requiring 70% of subsidies to be spent on salaries and 30% on operational costs. Previously, there was a 80–20% split. The new clause has forced some organisations to retrench staff members.

Lesufi said on Tuesday that the 70-30% clause would be “suspended”.

Some service-level agreements issued to organisations also did not include dates for when tranches would be paid. Lesufi said that this and other “disturbing issues” with the agreements would be reviewed by a “tripartite technical team” with representatives from the non-profit sector, the finance department, and the social development department, who would be given 21 days to complete a report.

“This sector is precious. This sector assists government a lot, and this sector needs to be defended at all times,” said Lesufi.

Lesufi’s spokesperson Sizwe Pamla did not respond to GroundUp’s questions.

Published originally on GroundUp.

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