North West government spent R54m on abandoned housing project

The North West department of local government and human settlement has spent over R54-million on a project that has been abandoned and for which the monies were never accounted for, the portfolio committee on local government said on Thursday.

“Anybody can see that the department entered into this thing recklessly and they are not doing oversight on their projects,” said committee chairperson Motlalepula Rosho.

This followed the portfolio committee’s unannounced oversight visit to assess the status of community residential units at Extension 39 in Mahikeng and Unit 3 in Mmabatho, on Wednesday.

According to the acting chief director for housing development at the department, Vusi Bidi, the department entered into a memorandum of understanding with Marang Estates (the developer) and the Social Housing Regulatory Authority (SHRA) to develop 2 400 social housing units on Marang Estates Mixed-Housing Project in Mahikeng, and made an initial contribution of R54-million as part of Phase One. Marang Estates had to contribute 20% to the amount of the project and SHRA also had to make a certain contribution.

He said the department entered into this project late after construction had already started.

“The department initially transferred the amount [R54-million] to the SHRA but the authority returned the monies claiming that the money was too late and that the developer was not registered with National Home Builders Registration Council [NHBRC] and did not meet its standards as there is no compliance certificate issued.”

‘We discovered the project had been abandoned’
The department then transferred the R54-million to the developer as part of Phase One.

“At the start of Phase Two of the project, we discovered that the project had been abandoned and there was no one to account on the monies already paid but, SHRA had opened a case and came to the department for affidavits of the people that were involved and also visited the municipality,” said Bidi.

He said the developer had the title deed for the land, but they did not know how the developer acquired the title deed, because they did not pay all the monies during the purchase of the land.

The acting director for housing division planning, Tebogo Phaedi, said the land was sold for R89-million at an auction to the developer who was the previous owner of the land.


“The company was liquidated and the land was auctioned. The same developer then bought the land and only paid 5% of the actual amount. We do not know how he acquired the title deed as there was a huge outstanding amount.”

‘Huge demand for accommodation in Mahikeng’
Rosho said the department recklessly spent public funds without verifying the details pertaining to the contract.

“There is no value for money here and there is huge demand for accommodation in Mahikeng. R54-million is gone and it cannot be accounted for, Marang is not even coming on board, the municipality itself issued a title deed without verifying whether the money was paid or not.”

She said the matter must be investigated and the department must recover the R54-million it had paid out.

“We are going to hold the municipality accountable as well as this is for the interest of our communities and government, how do they give a person a title deed without even paying all the money the land was purchased for,” she said.

The committee will next week call the head of department for human settlements, the municipality and the developers to come and account as to what actually happened in the project and what their intentions are going forward. – African News Agency (ANA)

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