Housing dream turns into chaos in stalled R4.2 billion project

When Minister of Human Settlements Thembi Simelane visited the Matlosana N12 West Catalytic Project in 2025, officials emerged from the meeting with assurances. Governance failures would be addressed. Project structures would be revived. Construction would resume.

More than a year later, the people of Ward 15 are still waiting for houses promised to them in 2023. At Matlosana Estates Extension 10, construction has stalled. The contractor has been served with a termination notice. Residents have been called into meetings and told, once again, to be patient.

Nearly every official with authority to explain the project's collapse has declined to answer questions. The documents, however, paint a damning picture: repeated payment failures by the North West Department of Human Settlements, contractual obligations being ignored, invoices left unpaid for months, and a subsidy system error known to officials for years that has never been corrected.

The Matlosana N12 West Catalytic Project was conceived as one of the North West province's flagship human settlements developments, with at least R4.2 billion earmarked for its completion.

Stretching across 504 hectares along the N12 corridor, it was intended to deliver more than 20,000 housing opportunities alongside schools, retail facilities and social amenities linking Klerksdorp with neighbouring communities, including Alabama, Jouberton and Roosheuwel.

Government planning documents described it as transformative. Today, large sections of the site stand idle. Allegations have circulated over the years that funds intended for the development were redirected toward politically connected projects. More than a thousand families remain trapped in limbo, official records pointing directly to government failures as a central cause.

At the centre of the current dispute is MXN Development Construction CC, the contractor appointed by the Department. On April 30, 2026, the Department's Head of Department, Kgomotso Mahlobo, issued the company with a Notice of Intention to Terminate Contract B17040029/8, alleging that the contractor had abandoned the site and failed to perform.

MXN managing director Nhlanhla Nkala says the accusation is false, and project records appear to support him.

In a formal response dated May 4, 2026, Nkala was unequivocal: "This assertion is factually incorrect and does not reflect the reality on the ground. MXN Development Construction has not abandoned the project, nor have we ceased operations. Our teams remain mobilised on site, and we are currently finalising 33 houses earmarked for handover to the Department before the end of this month."

Speaking to IOL, Nkala went further: "Every payment delay, every short payment, every unanswered letter, it is all there in the record. The province created the conditions that made it impossible for us to perform, and then issued a termination notice blaming us for not performing. The documents confirm exactly what happened and exactly who failed to meet their obligations."

Internal project records show that by the time the termination notice was issued, MXN had completed 501 foundations, built 385 units to wall plate level, roofed 376 houses, and fully handed over 263 homes to beneficiaries. Financial progress on the R339,852,458 contract stood at 22.61%. More than 1,400 units remained unfinished.

Detailed questions submitted to Mahlobo, including whether inspections had been conducted before the notice was issued and whether the Department had responded in writing to the contractor's repeated complaints, received no reply.

The silence from the Department matters because the documentary trail suggests it was not only failing to respond to correspondence but also failing to meet its own contractual obligations. The agreement between MXN and the Department required invoices to be paid within 30 days. The payment history tells a very different story.

Claim 46, submitted in October 2024 for R5,866,309.20, was only paid in June 2025, 242 days later. Claim 47, submitted in October 2025 for R1,591,981.75, took more than 100 days to receive only partial payment, with the Department allegedly underpaying the contractor by R239,435.30. Claim 48 suffered a similar fate, with partial payment arriving after approximately 135 days and R379,555.55 still outstanding.

In a March 26, 2026, letter to the Department, Nkala laid out the consequences directly: "These delays in processing and capturing claims have disrupted cash flow and directly impacted our ability to sustain construction momentum." According to the correspondence, subcontractors went unpaid, suppliers began charging interest on overdue accounts, and construction slowed dramatically. "Despite our repeated requests for claims to be paid," Nkala wrote, "the Department consistently indicated that there were no funds available."

When asked what remedial steps were taken after invoices repeatedly breached the 30-day requirement, Mahlobo did not respond. Nkala described the financial toll as impossible to absorb: "About 500 units were under construction but stalled due to non-payment. Additional phases had not started. We had procured materials for serviced stands in Tigane, work that was approximately 95% complete, but those materials are sitting unused. We are watching legitimate investment erode because the government will not pay what it owes."

If payment delays destabilised the project, a separate administrative failure pushed it even deeper into crisis. In September 2024, both parties signed an addendum increasing the subsidy quantum per unit from R141,294.00 to R183,257.00. The adjustment reflected severe geotechnical conditions on site, high-plasticity clay soil that became unstable during rainfall, and significantly increased construction costs.

The revised amount was formally approved. But the Housing Subsidy System was never updated. Instead, it continued reflecting a lower amount of R166,089.20 per unit, creating a shortfall of R17,167.80 for every house built. Documents reviewed by IOL show that officials were first alerted to the discrepancy in 2023. By the time the termination notice was issued in 2026, the issue had still not been corrected.

The consequences were substantial. Claim 49, valued at R2,527,000.00, could not even be captured on the system because the updated subsidy amount had never been loaded. By March 2026, MXN said more than R4 million in legitimate claims remained unpaid directly because of the unresolved discrepancy.

"The documents confirm that we raised this issue repeatedly, in writing, over a period of years," Nkala said. "The province was aware of it. They signed the addendum acknowledging the problem. And yet the system was never corrected. That failure sits entirely with the Department."

Questions sent to Mahlobo about why the incorrect subsidy amount remained on the system for years, who was responsible for correcting it, and why repeated requests dating back to 2023 failed to produce action received no response.

District Director Macmillan Keboneilwe also did not respond, though documents indicate he had reportedly prepared a submission to the Departmental Budget and Allocation Committee to resolve the issue, a process that was apparently never completed. Sources further alleged that questions submitted to Keboneilwe were circulated within political and business circles rather than answered officially.

The breakdown between the contractor and the Department extended beyond finances. Clause 15.5 of the agreement required quarterly review meetings to address disputes, delays and operational problems. The meetings were mandatory.

There is no evidence that any were held. Between 2024 and 2026, MXN submitted multiple formal letters warning about payment delays, subsidy discrepancies and deteriorating site conditions. No written responses from the Department could be produced.

In its formal response to the termination notice, MXN cited the contractual principle directly: "Clause 3 of the Agreement requires both parties to act in concert in good faith to achieve the aims of the project. Issuing a termination notice without addressing the challenges raised, and without engaging MXN as required, is inconsistent with the principle of good faith."

Nkala was blunter in conversation: "They did not answer our letters. They did not call the meetings they were contractually required to call. They did not fix the system error. They did not pay the invoices on time. And when the project slowed because of all of that, they terminated us. I am asking anyone who reads these documents to tell me which party failed to meet its obligations."

On May 7, 2026, residents gathered at Extension 10 A Circle for a community meeting convened by City of Matlosana Speaker of Council Stella Mondlane-Ngwenya. They were told that the current contractor's agreement would be terminated, a new contractor would be appointed during the 2026/2027 financial year, and construction would continue.

The timeline raises serious questions. The latest contractual addendum requires the project to be completed by March 31, 2027. Less than eleven months remain. No replacement contractor has been announced. Questions submitted to Mondlane-Ngwenya about whether the deadline remained realistic and what accountability mechanisms existed went unanswered.

Parliament's Portfolio Committee on Human Settlements had previously flagged problems with the development, raising concerns about contractor management and communication failures, and recommending that future housing developments use multiple contractors to reduce delivery risks.

That recommendation was never implemented. Premier Lazarus Mokgosi acknowledged in his 2026 State of the Province Address that budget cuts, housing backlogs and stalled developments were undermining delivery across the province. A provincial allocation of more than R500 million toward housing construction in three municipalities was announced. Construction at Matlosana is still stalled.

Questions directed to Minister Simelane's spokesperson were referred to the MEC for Human Settlements' spokesperson, Lerato Gambu. No response was provided. A reminder was sent to Gambu for responses but that was also not responded to. 

Nkala says MXN remains willing to finish the job, but only if the government meets its obligations. "We remain fully committed to completing this project within the extended timeframe of March 31, 2027. What we need is for the Department to formally retract the termination notice, correct the HSS quantum so that our legitimate claims can be processed, and pay what is owed.

The province failed to fulfil its obligations. The documents show that beyond any reasonable doubt. We are not walking away from this project. We are asking the government to stop walking away from the people who are waiting for these houses."

Detailed questions were submitted to HOD Kgomotso Mahlobo, District Director Macmillan Keboneilwe, City of Matlosana Speaker Stella Mondlane-Ngwenya, and the office of Minister Thembi Simelane, with a deadline of May 12 for responses. None provided substantive responses by the time of publication. The Provincial Department's Director of Communication, Dineo Thapelo, requested an extension to respond but failed to meet the revised deadline.

karabo.ngoepe@inl.co.za