Durban council seeks another R1bn loan

A request for a loan of R1-billion has raised voices of concern amongst members of the the eThekwini Finance Committee meeting who were presented with the request at a meeting on 17 September. According to councillor Rick Crouch, this is the second such request for a loan of R1 billion in as many months.

Crouch, a member of the Finance and Procurement Committee, said the city currently has outstanding loan amounts of R10,2 billion which costs the city more than R1 billion a year to service the debt.

“In the current economic climate it is absolutely unacceptable that the city would be presented with this additional loan request. The argument from Krish Kumar (CFO) and the ANC is that this loan was budgeted for in the 2015/2016 budget that was recently approved by the ANC and which the DA voted against. My contention is that just because it is in the budget does not mean we have to spend it. With the current state of the world economy I suggested that we re-look at the budgets, make some cuts and reprioritse our priorities,” said Crouch.

He said the ANC disagreed with this and the loan request was passed with the DA voting against it.

“I told the ANC and Krish Kumar that this council was like a teenager with his first credit card on a spending spree. After a day in committee or council I feel as though I have to go home and take a shower. There is no respect for the ratepayers or their money, the ANC looks at the rates income as their own money, to do with what they want with no accountability,” said Crouch.

eThekwini Head of Communications, Tozi Mthethwa, said: “eThekwini Municipality ensures that affordability is uncompromised and is key prior to any borrowings. The R1 billion loan is intended to unlock economic opportunities, expand investment, ensure service delivery and create jobs as part of restructuring the City’s urban form.

The crux of the report tabled at the meeting was merely procedural in terms of the Municipal Financial Management Act as the R1 billion has already been budgeted into the 2015/16 Financial Medium Term Revenue Framework therefore it will not incur any additional tariffs increases for our customers and ratepayers.”

She said the City had delivered on key achievements with the development of areas like Umhlanga with the Gateway Theatre of Shopping, uMlazi development of MegaCity and KwaMnyandu Mall and the Inanda, Ntuzuma and KwaMaashu area with the Bridge City Mall, the Umgeni interchange, Riverhorse Valley, the beachfront upgrade and the likes, and that loans are used to fund capital projects only identified through the City’s prioritisation process based on the Integrated Development Plan (IDP) and the budget, two important instruments for ensuring service delivery.

“The IDP and budget are directly informed by the needs submitted by the community through the IDP process and previous budget participation processes and is dedicated to spending money on core infrastructural services such as water, sanitation, electricity, solid waste, housing, transport, roads and stormwater projects while the operating budget makes provision for the continuation of the services provided by the municipality,” said Mthethwa.

She said the loan would be allocated to projects including upgrading roads, electricity and water and sanitation.

“EThekwini has strong financial indicators and cognisance should be taken that the municipality’s gearing ratio has improved over the years. The municipality has a very favourable gearing ratio that sits at 31.2 per cent as of the 31 August, which is below the norm of 45 per cent set by National Treasury and thus has capacity to further invest in capital projects,” she said.

Mthethwa said the loan budgeted for in the budget tabled and adopted on 27 May 2015 is geared towards accelerating service delivery in eThekwini and ensuring that infrastructure growth is key for the sustainability of the city.