Johannesburg – The much-publicised R2.5 billion loan will put the City of Johannesburg under unnecessary financial burden for 15 years, the Good Party has warned.
Earlier this week, the City announced that it had approved the R2.5 billion loan from the French Development Bank (AFD).
The loan is earmarked for infrastructure development projects, including upgrading, fixing, and replacing roads, as well as improving the power grid and wastewater plants in Johannesburg.
While the majority of the Council voted to approve the loan, the Good Party, which opposed it, said Thursday it needed more information.
Good Party National Chairperson and Councillor in the City of Johannesburg, Matthew Cook, said the loan was approved with the support of ActionSA, the Democratic Alliance (DA), and the African National Congress (ANC), among others.
“Good has consistently been asking for additional information and more clarity on the loan that was put forward without any project plans,” Councillor Cook said in a statement.
“Despite this, it seems only a privileged few got their questions answered, while the full information was not shared with Council as a collective.”
Councillor Cook said the Good Party understands that metros need to raise funds and often engage both local and international lenders for bonds and long-term loans, however, the rule of law and due process must always be adhered to.
“Unfortunately, without project plans and details, this loan defies the basic requirements of the Municipal Finance Management Act and violates principles of good governance,” said Councillor Cook.
He said in a city like Johannesburg, where roads were falling apart, with failing traffic lights and crumbling water systems, the focus should be on infrastructure.
“However, we do not know and cannot support this blindly,” said Councillor Cook.
“The City of Joburg is already in shambles as a result of years of transactional and hypocritical politics – and now we find ourselves back here again.”
However, the DA in Johannesburg said it approved the loan after it was tabled with all the requisite information.
“We have been very clear that good governance is non-negotiable and it is for this reason that we requested more details to be made available to councillors to make an informed decision,” said Belinda Kayser-Echeozonjoku, DA Councillor in the City of Johannesburg.
“It is, however, concerning that this information is only made available when some parties are negotiating for positions in exchange for support for the loan, as has been widely reported.”
Councillor Kayser-Echeozonjoku added: “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 that owe the city millions.
“This will greatly assist the city to honour its financial obligations under the strained circumstances.”
Councillor Kayser-Echeozonjoku said for this loan to be used appropriately it would be imperative that the City of Johannesburg ensure compliance with Regulation 36 of the Municipal Supply Management Service, more specifically to Regulation 36(1)(a)(v).
“We urge the city to take the decision to write off some debts owed to the City under review,” said Councillor Kayser-Echeozonjoku.
“There cannot be zero consequences for those who place the city in a more difficult position than it needs to be in.”
Commenting on the matter Joburg Mayor Kabelo Gwamanda, who is under pressure to resign, said: “The loan is not going to affect residents in any way.
“This has always been a funding model of the city whereby it depends on three sources.
“Firstly, is revenue that we generate as a city, secondly, grant funding from the National Treasury, and the third being loans that we take.
“It has always been a standing approach for the city.”
ActionSA and other organisations are calling for Mayor Gwamanda, a member of the minority Al Jama-ah party, to step down.
The mayor has the backing of the much larger ANC.
