Ethekwini Municipality has put forward a motion to borrow R500 million in long-term finance for capital projects.
The proposed 15-year fixed-interest rate loan will result in R485 million in interest being paid over the period. The executive committee agreed to go ahead with the idea, which was mooted in 2019. At the time, municipal manager Sipho Nzuza had said the city was contemplating issuing a bond on the stock exchange to raise R1 billion in addition to the loan. However, the deputy city manager for Economic Development, Phillip Sithole warns that Durban’s prospect of attracting investors and boosting its economy could be dealt a major blow if the municipality is unable to borrow the R500 million to fix the city’s infrastructure that was damaged by the recent floods. Sithole described the latest borrowing as “the most important in the city’s history of borrowing”. Opposition parties expressed concerns about the city’s borrowing being excessive, saying it should focus on collecting more than R17bn owed to it by residents and government departments for services. Sithole warned that the city cannot be left with dysfunctional infrastructure.“We have investors in the Durban South basin that are currently not operational because of the infrastructure challenges, if we don’t fix it we will be saying to these investors that we will not be dealing with the challenges that you are facing,” said Sithole.
City officials have warned that the damaged infrastructure has led to a decline in revenue and has the potential to undermine the confidence of current and future investors, undermining the city’s economic prospects. A report on the budget resolution recommended that proposed budget borrowings be increased by R500m for capital projects to deal with damages arising from the recent storms. Although KwaZulu-Natal was promised R1 billion in disaster relief aid by the national government, there has been a delay in receiving the money which has prompted the city to look to raise the money privately. The municipality had already budgeted to borrow R1bn before the floods and this has now been increased to R1.5bn. The deputy city manager for finance, Sandile Mnguni, said the city was already paying a heavy price in terms of revenue loss, saying it was important that infrastructure was fixed as a matter of urgency. “The damaged infrastructure is having a negative impact on the revenue. In May, we have already seen a drop in revenue.” DA councillor Nicole Graham said there has been no attempt to find a political solution to find the money needed. “The CFO and others are saying we need the money to deliver services – we do, but why has there been no pressure on the national government to come to the party here?”
