City’s R300 mil loan on hold

A report recommending that a R300 million loan be taken from the Development Bank of South Africa (DBSA) to upgrade rural roads in the municipal area of Polokwane was met with disagreement during last Thursday’s council meeting and referred back for later discussion.
Economic Freedom Fighters (EFF) councillors emphasised that they had not been afforded 21 days prior notice and details of the matter as required by the Municipal Finance Management Act and that the matter should be referred back for debating during the next council meeting.
Democratic Alliance (DA) councillor Franco Marx said that the loan, with an interest rate of 9,47% makes no financial sense while the municipality currently has investments in excess of R150 million earning only 2% interest per annum. “If the municipality could only succeed to collect the more that R300 million that is owed by Mankweng residents, the loan would not be necessary,” Marx argued and added that the proposed loan will accrue R263 million over the 15-years’ lifespan of the repayment.
Explaining the current scenario, Municipal Manager Dikgape Makobe said that the municipality currently pays between 10,79% and 11% and that repayment of the loan will only commence after two years when the current loans with DBSA are serviced.

Story: BARRY VILJOEN
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