The R2-billion Zumaville town project, to be built near President Jacob Zuma's rural homestead in Nkandla, is in chaos, the Mail&Guardian reported on Friday.
The newspaper reported that the tender bids for the town planning closed on Friday and "technocrats" were scrambling to get the shovel ready.
A number of problems had arisen.
The primary facilitator of the project, Masibambisane Rural Development Initiative was claiming bankruptcy, there was confusion between government departments involved in the building of the town, and a number of big business partners knew nothing about their involvement in the project.
"We don't have money. It is the end of the month and we have to pay wages for the people assisting us," Masibambisane's deputy chairman Deebo Mzobe was quoted as saying.
"I have to take money from my own account and sometimes I give it to [volunteers] to keep them going."
The project also faced possible investigation by a Parliamentary committee and the public protector, after complaints that Nkandla was receiving preferential treatment from government.