City of Joburg approves R2.5 billion overseas loan

The City of Johannesburg has agreed to loan R2.5 billion from the French Development Agency (AFD).

ActionSA voted with the African National Congress (ANC) and African Independent Congress (AIC), African Transformation Movement (ATM), Economic Freedom Fighters (EFF) and Patriotic Alliance (PA) in passing a resolution to approve the loan. The Good Party and Freedom Front Plus voted against it.

The loan has been at the centre of controversy for several weeks. It was rejected at a previous council meeting earlier this month.

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The loan was initially turned down because Joburg Finance MMC Dada Morero did not provide key details on what the loan was for and its conditions.

The cost of the loan was also raised as a serious concern, but Morero reportedly said without it the city faced a potential R2 billion shortfall. 

ActionSA first oppose, then accept, loan

In a statement after the last debate on the loan, ActionSA’s council caucus leader Nobuhle Mthembu said the party would not agree to the loan.

“ActionSA is adamant that the Council cannot take a loan that will burden Johannesburg residents for the next 15 years.

“We believe that the city must emphasise collecting revenue from the numerous government and provincial departments that owe the city millions of rands, an amount roughly equal to the proposed loan. These departments are well known to the city.”

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The party has since held meetings to discuss its stance on several issues in the city. It resolved to work and vote with the ANC on certain matters. Its leader Herman Mashaba said this was necessary to prevent the municipality from collapsing.

Why the DA U-turned on the loan

DA Caucus leader councillor Belinda Kayser-Echeozonjoku said the party now agreed with the loan after “all the requisite information” was given “for the council to make an informed decision”.

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“We note the city’s revenue enhancement efforts through the war room and also the monitoring that will be done by the Provincial Treasury on debt collection from government departments and SOEs who owe the city millions.

“This will greatly assist the city to honour its financial obligations under the strained circumstances.”

Kayser-Echeozonjoku said the DA had written to the Minister of Finance, National Treasury and the Department of Cooperative Governance and Traditional Affairs (Cogta) to help monitor the use of the loan.