Ethekwini get the nod to borrow R500m for projects
City manager Sipho Nzuza. City manager Sipho Nzuza.
Durban - ETHEKWINI Municipality has put in motion its intention to borrow R500million in long-term finance for capital projects for the 2018/19 and 2019/20 financial years.
The proposed 15-year fixed-interest rate loan will result in R485m in interest being paid over the period.
Yesterday, the executive committee agreed to go ahead with the idea, which was mooted in 2019.
At the time, municipal manager Sipho Nzuza had said the city was contemplating issuing a bond on the stock exchange to raise R1billion in addition to the loan.
The projects include Warwick Junction, the Point Waterfront, the Integrated Rapid Public Transport Network-C3 Corridor and the Cornubia Integrated Development.
Opposition parties voted against the progress report contained in the agenda tabled at the executive committee meeting held at the City Hall yesterday, citing the danger of getting overburdened with debt with poor revenue collection systems.
The report proposed an approval in principle to grant the raising of long-term debt finance for capital projects of R500m for 15 years with the Development Bank of Southern Africa Limited being the lender. The report also sought to grant the city’s chief financial officer, Krish Kumar, and the legal department powers to engage in discussions with the bank.
The opposition DA and IFP warned against “reckless” borrowing while failing to collect debt owed by consumers.
The IFP’s Mdu Nkosi said the city had been borrowing money for “invisible” projects. “We should consider ditching this idea because we keep borrowing money for capital projects, yet we’re unable to account for services consumed by the people.
“We’re already servicing an over a billion rand loan. Where are we going to get the money to service this new loan, seeing that people are finding it difficult to pay for rates? We’re not doing well in collecting what’s owed to the city and that’s where our energies should be directed,” he said.
The DA also voted against the agenda item, with caucus leader Nicole Graham saying the rate at which the city was borrowing was worrying.
“The city has a poor revenue collection rate and too much existing debt. The frequency at which we are borrowing is worrying. We borrow so much that it makes it difficult to maintain the loans. We have so much money - over R6 billion owed to the city - which we fail to recover. Parastatals and some government departments are some of the culprits,” Graham said.
However, Kumar said the municipality was improving its collection rates and more effort would be made in this regard.
The city had a capital budget of R7.5bn for the 2017/18 financial year, the second-highest behind Joburg.