ETHEKWINI Municipality’s decision to borrow R1 billion through a bond issuance was criticised by opposition parties during a full council meeting last week.
The money will be prioritised for the city’s capital projects which include a variety of projects from infrastructure, renovation, new constructions and replacing of existing facilities.
According to the council report, the money will be sought through a bond issuance under the eThekwini Municipality Domestic Medium-Term Note Programme that is registered at the Johannesburg Stock Exchange.
The tenor of the bond will be up to a maximum of 15 years with a bond spread of up to 300 basis points.
Nicole Graham, Democratic Alliance eThekwini caucus leader, said it was reckless for the city to be borrowing during a time of economic uncertainty.
“We keep spending money on silly things,” said Graham.
“In a time when we are unsure of what income we will have in 6 months or a year and whether we will be able to pay it back.”
Graham suggested the city focus its intentions on recuperating money from its debtors, namely Ingonyama Trust and Transnat Durban.
Ingonyama Trust, of which King Goodwill Zwelithini is the sole trustee, owes the city R181 million and Transnat R505 million, according to the Medium Term Revenue and Expenditure Framework (MTREF) 2020/2021 to 2022/2023.
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Further to that, MRTEF states the city’s total debt is R12.8 billion of which R4 billion represents doubtful debt and R2.1 billion uncollectable debt.
EThekwini Mayor, Mxolisi Kaunda said the African National Congress did not “encourage excessive borrowing” but the municipality was trying to balance between service delivery and budget shortages.
The motion for the R1 billion bond was passed and carried by the ANC majority with opposition parties voting against.
On a separate agenda item, the council also passed a bipartisan adjustment budget of R310 million, categorized as unauthorized expenditure. That money will go towards service delivery in the water and sanitation department.
Yogis Govender from the DA said while they supported the motion to increase service delivery, the D was not happy with the city constantly shifting money around to plug gaps.
“This is not the first time this department (Water and electricity) has run out of money,” she said. “No report has been made to the executive council in terms of what the problem is and what the remedies are.”
The adjustment budget passed with 137/139 councillors voting in favour while two abstained.
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