City of Joburg council rejects Mpho Phalatse’s R2 billion loan request again

City of Joburg mayor, Mpho Phalatse’s bid for a R2 billion short-term loan has been rejected yet again by the metro’s council.

The City held the first of its two day ordinary council meeting on Wednesday, where councillors voted on the multiparty government’s Development Bank of Southern Africa (DBSA) loan application.

‘Cash flow mismatches’

Shortly before the sitting, Phalatse briefed the media about the City’s finances, saying the metro was experiencing “cash flow mismatches”.

The mayor explained that Covid-19 pandemic had an effect on the City’s ability to collect revenue, resulting in the situation the metro finds itself in to date.

She requested the council to approve the short-term loan for the sake of the metro and its residents, insisting that the City was in the position to honour its repayments.

“As it stands today, the City’s sinking fund – the fund set aside to repay loans or bonds – is adequately funded for the next three years,” Phalatse said.

ALSO READ: City of Joburg mayor, Mpho Phalatse wants motion of no confidence rule reviewed

This loan will be repaid by the end of June 2023, according to the mayor.

“Taking out a short term loan is a normal business practice. The disinformation by a corrupted cabal that short term loans are unacceptable, that it somehow proves that the City is broke is unjustified and a political power play at best.”

While the City, Phalatse said, is not facing an immediate crisis, the metro may find itself in “an uneasy state of financial affairs”.

Despite her plea, the loan application was rejected for the second time on Wednesday afternoon.

Watch the council sitting below:

‘Poor governance’

Earlier, the Economic Freedom Fighters (EFF) in Joburg criticised the Democratic Alliance (DA)-led multiparty government for poor governance by failing to improve the City’s finances.

“Currently, the City doesn’t have cash-flow to pay for its service providers and very soon it will not be able to pay salaries for its employees,” the Red Berets said in a statement on Wednesday.

The EFF has urged the City to compile “a detailed diagnosis of the root-cause of poor revenue collection and come up with remedial actions to be implemented immediately”.

NOW READ: Avis car rental withdraws fleet from City of Joburg amid delays to approve new contract

“We are [also] calling for an urgent appointment of an independent auditing firm to scrutinise the City’s financial status and to investigate the possibilities that the revenue and property staff are possibly pocketing some funds such as private school’s rebates and paying less on their rates,” the party said.

“In addition to this investigation, the executive must table a report which details the amounts spent on legal services since mayor Phalatse took office.”

In May, the City passed an adjustment budget of R77.3 billion.