Mixed reaction to eThekwini’s intention to borrow R1bn to fund capital projects
|Published
Sipho Cele Picture: Nqobile Mbonambi/ Africannewsagency(ANA)
DURBAN - AS THE eThekwini Municipality invites the public to have a say on its intention to borrow over R1billion to fund capital projects, an economist has welcomed the plan as a much-needed boost for growth, dampening fears from critics.
The public has until April 9 to comment on the city’s intention to borrow R1.5bn, purportedly to fund capital projects, according to a notice published in The Mercury last week, in terms of the Municipal Finance Management Act and the Municipal Systems Act.
Acting city manager Sipho Cele said the process to take the loan should have been started last year, but had been halted due to economic uncertainty as a result of the lockdown.
“We have now entered into a process towards securing the loan with financial institutions in order to fund capital projects. We are giving the general public and interested parties an opportunity to make inputs on this process,” said Cele, adding that the city was confident about its capability to repay the loan.
Economist Professor Irshad Kaseeram, of the University of Zululand, came out in support of the bid, saying that without capital investment, the municipality would be severely constrained. Without investment into capital projects, the city’s growth potential, he said, would be reduced “to the detriment of all its citizens”.
“If the municipality … promotes good governance, transparency, eradicates corruption and engages in private-public and community partnerships, it is entirely doable to fund capital projects on a relatively small loan of R1.5bn, given the great economic potential of the municipality.
“Moreover eThekwini contributes 9% to national GDP and 57% to the provincial GDP. In terms of its credit rating, it is investment grade in both the short (A1+) and long (AA+) terms, with a low debt ratio of around 25%. Its debt collection rate is just over 90%. All these factors together make (the city) credit worthy,” said Kaseeram.
Opposition parties, the DA and IFP , criticised the “borrowing habit” and said that the city was not working hard enough to collect billions of rand owed by government departments and state-owned enterprises
DA caucus leader Nicole Graham was not upbeat about the consultation process, saying it would have no impact on changing the position already taken by the municipality on the matter.
“The city doesn’t really listen to the public. We have seen over the years people submit input and information until they are blue in the face and the city does what it was planning to do anyway, which is deeply unfortunate,” Graham said.
The IFP’s representative on the city’s executive committee, Mdu Nkosi, said it was a major concern that the city would spend a significant amount annually to service the loan over a 15-year period.
“The city’s collection rate is very poor, yet on the other hand you look at the huge amounts owed by national and provincial government departments as well as the state-owned enterprises,” said Nkosi.
THE MERCURY