3 years ago
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ARTICLE AD BOX
Councillors vote at the Constance Connie Bapela Council in Johannesburg.
- The Johannesburg council has approved a R2 billion DBSA loan.
- The loan was previously rejected when former mayor Mpho Phalatse presented it.
- The money will be used for the operational costs of the City.
The City of Johannesburg council has finally agreed to approve a R2 billion loan from the Development Bank of Southern Africa (DBSA).
According to Mayor Thapelo Amad, the loan was eventually approved after a lengthy council sitting which went into the early hours of Thursday morning.
The loan was tabled for the fourth time on Wednesday but had to be deferred to later so the date of the application could be changed. The application still had the previous deadline of 12 November 2022, making it invalid.
The last vote on 11 November saw 137 councillors of the 270-strong council vote against the loan, which was being presented by then-mayor Mpho Phalatse.
The loan is meant for operational costs and must be paid back by 30 June this year, but according to the original agreement, the offer expired on 12 November 2022.
The loan became divisive as the then ANC-led opposition used it to say that the leadership did not know how to keep the City's finances afloat.
Speaking ahead of a vote on Wednesday, ATM councillor Lubabalo Magwentshu acknowledged that the loan agreement was identical to the one tabled by the DA in November. He said the loan was needed because of the dire financial state of the municipality.
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Magwentshu said the coalition government has denied the loan proposed by the former leadership in November because the DA had "refused to admit" that the City was bankrupt.
He said now that the City's financial situation was known, the new coalition government could see that the money was needed.
Margaret Arnolds from the African Independent Congress (AIC) said that some of the City's workers had not been paid in months, and came close to calling the DA-led coalition liars.
"The government on that side [the opposite side of council where the DA-led coalition sits] told a very different truth – I cannot use that other three-letter word in council."
'Not thought through'
The IFP's Mlungisi Mabaso cautioned that so much time had lapsed that the loan settlement date was no longer realistic.
He added that "resubmitting the report means you agree with what the report seeks to achieve, despite not voting for it before".
He also spoke about municipal workers who had not been paid. He said these included security personnel who had vacated their posts. Contractors had left sites unattended, resulting in them being vandalised, which added to the City's expenses.
He said:
So not supporting that report was [an idea] not thought through.
The ACDP's Ronald Harris noted that the draft agreement for the loan had been handed to the council without a payback plan attached.
However, the ANC's Adolf Marema said the City owed suppliers around R5 billion, adding that its coffers currently only contained around R400 million.
He spoke about the hardships faced by workers who went for months without pay, and how difficult their lives had been in January. He added that small, micro, and medium enterprises (SMMEs) hadn't been paid in three months.
Current Finance MMC Dada Morero, who became the mayor in September after Phalatse was illegally ousted, said there was space to work with DBSA to adjust the deadline.
While the DA, under the leadership of Phalatse, initially proposed the loan in November, the party is now opposing it, saying there would not be enough time to repay it and that it seemed to be in violation of the municipal laws.
'There is simply not enough time'
In a statement on Wednesday, DA councillors Phalatse and Julie Suddaby said it was "truly ironic and frustrating to hear the new executive mayor now cite the loan as a priority, meaning that there was a deliberate attempt to plunge Joburg into a financial crisis until a political arrangement [that] was made, in order to install their cabal after removing the prudent and effective multiparty government".
They added that the DA did not believe the agreement was prudent at such a late stage.
"Firstly, the offer from DBSA expired on 12 November last year, so the item being tabled today is invalid. Above and beyond that, the recommendations proposed in the report, authorising the City Manager to renegotiate and approve the terms of the loan, are in complete violation of the Municipal Finance Management Act, which states that only Council may approve or alter a short-term finance agreement.
"Thirdly, there is simply not enough time remaining before the end of the financial year for the City to repay the loan, plus the interest that will be added, considering the chronic revenue collection shortfall.
"As the current reporting shows, the City is not earning more interest than it is paying. And finally, should Council go ahead and approve this item and thereafter fail to repay the loan, councillors will be held personally liable for its repayment. At this point, using the loan will damage the City's finances far more than it will benefit it."
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