Joburg Government of Local Unity needs to come clean on R2,5 billion loan

9 July 2024

Today for a second time, The City of Joburg convened a council meeting to table a precarious R2,5billion loan from the Agence Francaise De Development which will place an unnecessary financial burden on residents for the next 15 years. 

GOOD believes the City needs to provide more clarity on the loan that has been sought for Capital Expenditure without specific project details or plans. This goes against a basic requirement of the Municipal Finance Management Act.

Moreover, in a city, like Johannesburg, where roads are falling apart, traffic lights are not working, countless electricity substations are failing and water systems are crumbling, the focus should be on infrastructure. 

If the report to the council showed a clear plan to invest in infrastructure - it is a loan that the residents of Joburg could get behind. 

But at the moment, without a specific plan, there is no way to measure the potential benefits or return on investment from the proposed projects. A loan that will inevitably be used to address cash flow shortages for operational expenses has no return on investment and cannot be accepted. 

Furthermore, the loan application was brought to the council by the Government of Local Unity (GLU) without following proper procedures. Initially, the application was tabled without relevant documentation, violating principles of good governance. The absence of crucial reports, such as the 3rd quarter report and the monthly section 71 report, renders the loan application incomplete and not properly vetted.

A continuous lack of financial transparency has left council without sufficient knowledge regarding the current financial standing of the city and deciding on such a substantial loan without a clear understanding of the city's financial health would be irresponsible.

Council must uphold accountability and ensure that all financial decisions are made with complete and accurate information.

Joburg residents are still coming to terms with the R200 electricity tariff which was introduced by the City at the beginning of July and will now have another unwanted responsibility of this loan repayment at a time when the cost-of-living crisis continues to worsen.

The residents of Johannesburg deserve to know exactly what the loan will be used for, why its necessary and what the impact will be on their rates and tariffs.

In light of these points, it is clear that the current loan proposal is fraught with issues that need to be addressed before any further consideration. The council must ensure that proper procedures are followed, financial transparency is maintained, and all alternatives are explored to make a responsible and informed decision.

Issued by Matthew Cook, GOOD National Chairperson and City of Johannesburg Councillor, 9 July 2024