Why Joburg needs another big loan

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16-04-2025
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Sowetan Live
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Public invited to comment on R750m loan bid

The City of Joburg says it has gone out to raise R750m loan from the International Finance Corporation (IFC) to fund upgrades of the metro's water reservoirs.

Joburg issued the public notice last week, in which it said a particular portion of the funds would be used towards financing capital expenditure with a repayment timeline of 15 years.

'We don’t want to go overboard and end up mismanaging funds meant for other needs.'

- Margaret Arnolds

The capital expenditure, as outlined in the notice, refers to long-term investments in essential infrastructure, such as water and sanitation, electricity, roads and housing.

Joburg's capital budget for 2025/26 is R7.26bn, with 42.2% (about R3.1bn) of it to be funded through loans which are to support large-scale infrastructure projects that the city cannot fully fund on its own.

This is the third long term loan that the city has taken as many years to fund its capital expenditure.

The city's total budget for 2024/25 was R83.1bn.

In 2024, thecouncil approved a R2.5bn loan from the French Development Agency, which also has to be repaid in 15 years. .

In 2023, R1bn was approved by the IFC, also looking to support infrastructure development, particularly to help Johannesburg Water with reservoir upgrades.

Joburg Water recently announced it has invested R95m into a new infrastructure project that will help boost water supply into the Midrand area. The construction of the new Erand Tower and Pump Station project is underway and will serve as additional capacity to the existing Erand Reservoir complex.

Joburg finance MMC Margaret Arnolds said part of the loan would go towards capital expenditure – specifically the construction of water infrastructure such as reservoirs to help improve supply. "The income generated by Joburg Water would be used to pay off the loan. And the amount is not too small for what we are targeting; it’s perfect," said Arnolds.

"We don’t want to go overboard and end up mismanaging funds meant for other needs. So this is just the beginning – it’s public participation first, then council; this isn't something we're going to do unilaterally."

She said they'd been transparent about the process. “Eventually, it will come back to me and others, and if people oppose it or raise concerns, we’ll have to assess how to move forward," Arnold said.

However, DA shadow MMC for finance Chris Santana said his party needed more clarity on the loan.  "I just need to understand when they say ‘for capital expenditure’, when they mentioned it to me, they said it was going to be purely for assisting Johannesburg Water to fix the reservoir. I want to understand where the money is going. The refurbishing of the reservoirs could be a capital project – extending its lifespan again.

"However, for me as a resident, and obviously as a city councillor, I don’t want to be in a situation where we’re continuously taking loans out to fund things that the city should actually be addressing – like technical losses, for one; and also dealing with revenue collection."

Santana said there was also a need to get a proper understanding of the city's indigent register and how many people actually qualify for the indigent grant. "So, we don’t know or can’t assess that, and that creates another problem in itself," he said.

"And then, of course, it’s just people that bypass meters and bypass services. The bottom line is that the cost of living and the cost of services have actually outstripped people’s ability to pay."

Public comments on the proposed loan agreement must be submitted by April 30.