Durban - Ratepayer organisations have launched a scathing attack on eThekwini Municipality for its plans to borrow R1.5 billion to fund the repairs to its infrastructure that was ravaged by the recent storms.
They argue that there is no need for the city to keep borrowing as there is enough money coming from ratepayers in the form of revenue for rates and services, and that these funds should be used to finance these programmes.
The city took out a public notice indicating its intention to borrow R1.5bn.
In the notice, the municipality said it intended to enter into a funding arrangement through the following mechanism: bond issuance, raising of a loan from a financial institution such as a bank or raising of a loan from a development finance institution.
The municipality said this borrowing was already part of the approved budget.
It is the same R1.5bn that the city recently listed in the approved budget for the 2022/23 financial year, and it said the money would be channelled towards infrastructure repairs.
An opposition party expressed support for the proposed loan, saying the city had no choice because there was a lot of damage caused by the storms that necessitated the need to borrow to attend to the damage.
However Ish Prahladh, of the Reservoir Hills Ratepayers’ Association, said there was no need to borrow money, adding that the loan spoke to the fact that the municipality was not being properly managed.
“There is a lot of money that is coming from ratepayers for rates and services – where is that money going? This borrowing shows that the municipality is not being run well,” he said.
“It is time the ratepayers took over and got involved in the running of the municipality; in the case of Reservoir Hills, we will be sending a note to the mayor to inform him of what we plan to do with the area,” he said. But he declined to elaborate on their plans.
Asad Gaffar, of the Westville Ratepayers’ Association, described the reckless borrowing of money as totally unnecessary as the municipality could reprioritise its budget.
“They claim they need the money to carry out essential repairs while they still continue to spend on projects unrelated to a municipality.
“Examples are funding of the recent beach soccer tournament and a fashion show.
“We as ratepayers are fed up because ultimately the loan (repayment) will be paid by the ratepayers,” he said.
Navin Dookran, of the Clare Estate Ratepayers’ Association, said the borrowing was not sustainable.
“You are borrowing on top of borrowings and paying at the same time, that is not a good business model whether you are running a business or a non-profit.
“Before we start with finger-pointing, we need to know what eThekwini is doing with the money. The first thing that needs to happen is to get an outside firm to audit the municipality,” he said.
Municipal spokesperson Msawakhe Mayisela said the loan would be used to fund the repairs to the city’s infrastructure that was damaged by the recent floods – namely water, electricity, road and stormwater networks.
“Accordingly, all the money will be used on capital projects and to improve service delivery to our people and to create a conducive environment for business and to attract new investors to the city to enhance economic development and job creation, as well as improve the quality of life of our people,” he said.
The planned loan, said Mayisela, had been carefully considered, taking into account the low debt gearing and profitability of the city. In the 2022/23 financial year, the city had made provision for the repayment of new borrowing.
He said the current debt gearing for the city was approximately 23% against the National Treasury benchmark of 45%. Accordingly, affordability, ability to repay the loan, and capacity to borrow were not issues, he said.
“We have always been very prudent in our borrowings, and will continue to do so.”
Mayisela said that over the past 10 years the city had borrowed R7.7bn. Over that time, the city had repaid part of the debt, and the current loan balance was R9.2bn.
IFP councillor Mdu Nkosi said the city had no choice in this case but to borrow and fix the infrastructure.
“We do need this money to repair infrastructure, especially for water and electricity.
“It is important that when we get this money we use it correctly, there are many people who are still living in mass care centres,” said Nkosi.
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