Gauteng municipality borrows R150m from banks

2012-07-17 14:38

Johannesburg - A Gauteng municipality has borrowed R150m from two commercial banks to pay its service providers, the Star newspaper reported on Tuesday.

Minutes of a special council meeting showed Emfuleni municipality, consisting of Vanderbijlpark, Vereeniging, Sebokeng, Evaton, and surrounding areas, had borrowed the money, according to the newspaper.

Fifty million rand was raised from Absa and R100m from Standard Bank, with the municipality reportedly owing service providers R30m.

Municipal spokesperson Paseka Rakosa told the newspaper on Monday: "We have approached financial institutions for a facility of R150m as indicated."

He said the loan was taken out according to the Municipal Financial Management Act.

"The loans will assist the municipality mainly to meet its short-term financial obligations."

Executive Mayor Greta Hlongwane said on Monday the municipality had a cash-flow problem, owing more than R2bn for services, such as electricity, rates, and water, the Star reported.

Earlier this year, the Gauteng portfolio committee on local government and housing ordered the province's department to assist the municipality to attract competent and qualified staff to deal with revenue.

The committee also urged the provincial legislature to help the municipality develop an effective billing system for debt recovery and revenue collection.

  • Freddie - 2012-07-17 14:52

    Kiss that money goodbye. Attract competent and qualified staff??? What a joke, there are no such cadres, and they would not take people who could actually do the job, that would be admitting AA and cadre deployment are disasters.

      arthur.halse - 2012-07-17 15:00

      Have to agree. It's a big joke.

      Willie - 2012-07-17 15:17

      How can we drum this into their heads.SOMEONE PLEASE HELP.STOP THE NONSENSE OF CADRE DEPLOYMENT.THIS NONSENSE IS NOT WORKING.The so-called cadres need to go to school PLEASE

      nosiphom.mazibuko - 2012-07-17 16:30

      There will be more roadblock in the Vaal, that is if they have money for fuel!

      denise.ryan.5203 - 2012-07-17 17:32

      the municipality is being run like a spaza shop

      warwick.gibson.1 - 2012-07-17 21:29

      Look who is the CEO of ABSA. Maria Ramos, talk about cadre depoyment.

  • sisie.indola - 2012-07-17 14:56

    Time to change my bank. These municipalities must stop giving themselves parties, noddy badges and increases. There is nothing to cheer about.

      Henk - 2012-07-17 15:16

      Keep on voting ANC!!!! Nothing to do with the banks!

      marcelle.joubertdurandt - 2012-07-17 15:18

      Sjoe! So glad it is not my bank that is one of the ones in this ........

      Clive - 2012-07-17 15:55

      @jackey.moss, Henk assumed nothing about colour. You are the culprit with a small mind. What you are assuming is that only blacks vote ANC. You are wrong, why are there ministers like Rob Davies ? Does he sit in parliament and vote DA ? Stick to the subject and forget colour. I think sisie has more guts then you. You are not perhaps employed by the municipality ?

      jeffrey.jones.357 - 2012-07-17 16:18

      Fair enough. No need for the racist comment by Henk. Rob Davies is in the cabinet because he is a communist, they are the only whites who get high positions in the ANC.

      Henk - 2012-07-17 20:26

      What is racist about the comment? Idiots, please go and take that book written by oxford and scroll to racist

  • shirley.steenkamp - 2012-07-17 15:03

    Another example of the "efficiency" of government and their otstanding ability to control their greey cadres! Il bet the heads of the departments in question live in the lap of luxury and drive fab cars! Now all they need is the brains to accompany the rest of their anatomy!

  • israel.maseko.5 - 2012-07-17 15:05

    The Banks were foolish in offering financial assistamce to the municipality, I also blame the Municipality Management for failing to address this issues effecctively. I suspect that there is misappropriation of funds. Hawks must be send there to investigate.

  • vivian.harris.73 - 2012-07-17 15:05

    WTF!? Why don't they just put back the money they stole? Bet u there's more than enough to pay their very large salaries....

  • luca.delbianco.3 - 2012-07-17 15:12

    Are we close to a banking and economic system meltdown or what here?

  • Henk - 2012-07-17 15:15

    oooh lalala, My mercedes is better than your BMW! WAIT! Lets borrow some money then I can place an order for a fleet of cars! And by the way if you saved one rand for every second in one year you will have R32 million. Now 2 billion is 62 years ago!

  • lawson.lutchman - 2012-07-17 15:15

    The begining of toxic mortages?

  • devon.riley.52 - 2012-07-17 15:16

    Hmm taking out long term loans from banks in order to settle short term debts. Sounds like they are in the financial poop. Won't be supprised if it is another Limpopo 2 situation. Watch this space.........

  • Ditantane - 2012-07-17 15:17

    they owed service providers 30m and loaned 150m from banks, so by now they must pay more than 260m back.

      BigChiefPlumbPudding - 2012-07-17 15:23


      tommy.jones.754918 - 2012-07-17 15:32

      Ditantane, Probably what they call long term financial planning - sad sad sad. The scary things is, this loan must have been approved by a Council, meaning it was not a one man decision, but all councilors. That means not one of them can see what most of us on this forum can see.

      denise.ryan.5203 - 2012-07-17 19:09

      30m is just the tip of the iceberg - the municipality is in debt to the tune of R2bn for services, such as electricity, rates, and water. Accounts a shambles? Who cares? Somehow, while we all know that millions are being filched from every level of government, nobody seems to get nailed. People who steal taxpayers' and ratepayers' money appear to carry on with impunity and it goes on year after year.

  • Ditantane - 2012-07-17 15:17

    they owed service providers 30m and loaned 150m from banks, so by now they must pay more than 260m back.

  • tommy.jones.754918 - 2012-07-17 15:20

    Can't pay the bank debt back, no problem, let's nationalize them. This is sooooooo bad and scary.

  • andre.vandeventer.16 - 2012-07-17 15:20

    it's wrong to enter long term loan agreements (debts) to pay short term debts. They can't handle money properly, only steal it!

  • willie.burger.7547 - 2012-07-17 15:21

    Implement personal liability! Nothing will change if individuals and their parties are not personally liable for every decision and its consequences. We only need a court to rule on this. If directors of companies are liable so are councillors and officials and the party which "deploys" them.

      rob.bayliss.94 - 2012-07-17 15:46

      Now there is a good plan. Make individuals liable for collective decisions. That would also make prospective councillors think hard before they stood for election. Now we are talking about responsible government at all levels. It gets my vote!

  • rob.bayliss.94 - 2012-07-17 15:21

    Maybe I missing something....? They owed 30mil, but borrowed 150mil. So what is the 120 mil for, new cars, cellphones...or parties and pictures for their offices?

  • BigChiefPlumbPudding - 2012-07-17 15:22

    "The loans will assist the municipality mainly to meet its short-term financial obligations." Yes, and this will in turn screw up any plans for the long term. It's just so true to Africa's approach isn't it? Waste the money, then borrow more, so that one day you will be completely bankrupt.

  • terrence.zulu.9 - 2012-07-17 15:25

    overspenders "big city"

  • zaaristotle - 2012-07-17 15:27

    Isn't it supposed to be good practice to never make debt to pay debt. It's for this similar reason that Europe is in a bit of a mess at the moment.

  • Boos - 2012-07-17 15:28

    Bye-Bye Bucks !! R150m down the drain..

  • bernard.buckley.3 - 2012-07-17 15:29

    And they want to combine MIDVAAL with these losers,it is the only solution, obviously wanting to put competent people in a position to right the wrongs.

      odupreez - 2012-07-17 15:57

      They need to get hold Midvaal money as well.

      warwick.gibson.1 - 2012-07-17 21:30

      No, to destroy midvall as well.

  • andrew.martin.71619533 - 2012-07-17 15:30 beemers and merksaydeez's all around....

  • mhlonishwa.buthelezi.9 - 2012-07-17 15:30

    This is not going to solve the problem of financial mismanagement... i have bad feeling about this.

  • arthur.halse - 2012-07-17 15:30

    This is so not good!! There is a reason why they are in the red. Lending money to them after they have been told by their buddies to employ competant people is like lending a bottle of booze to a drunk. We are on the slippery slopes......

      jacob.siyanda - 2012-07-17 17:21

      Are we assuming that everyone at this minicipality is incompetant? Though! ...... so with that rationale, if the company you work for borrows money, you are therefore incompetent!

      jacob.siyanda - 2012-07-17 18:15

      Are we assuming that everyone at this minicipality is incompetant? Though! ...... so with that rationale, if the company you work for borrows money, you are therefore incompetent!

      tommy.jones.754918 - 2012-07-18 12:53

      Jacob, the company I work for doesn't receive tax money from the Government every year, neither does it have an obligation to provide essential services (water, electricity, sewerage) to the public. Neither does it spend money like it is going out of fashion on useless feel good campaigns. What it does do however, is make sure every person/company/entity pays for work/services provided and that every penny is accounted for. Unfortunately, we can't say the same about most Municipalities in this country - and it is just sad that most of these failed Municipalities are run by the......You fill in the gap.

  • carol.harvey.9406 - 2012-07-17 15:34

    Oh!! So that's why they've doubled the market value on my property and with it doubling the rates and taxes they get from me (and numerous others). me off that they can't manage their money!!! WTF !!

  • tommy.jones.754918 - 2012-07-17 15:37

    Wait, aren't you guys in Gauteng having the African Cup of Nations soon. Double wammy, ouch.

  • rob.bayliss.94 - 2012-07-17 15:38

    Thank goodness I am with FNB! But watch how ABSA and Standard get in a knot trying to recover from this when it goes up-belly. I wonder what collateral the banks asked for? Must be underwritten by the M*l*ma family trust.

      warwick.gibson.1 - 2012-07-17 21:31

      ABSA = Maria Ramos = ANC.

  • donald - 2012-07-17 15:42

    it should not be allowed

      jacob.siyanda - 2012-07-17 17:17

      Why not? Government should be run like a business, and businesses borrow money all the time.

  • joe.irwin.50 - 2012-07-17 15:45

    If it is not already too late, maybe, just maybe these incompetent people will realize that the time has come to enploy the best person for the job; without consideration of BEE or AA. The only problem is that they will have to replace themselves.

  • petereliotjohnson - 2012-07-17 15:49

    Take a wild guess who will be footing the bill on the interest. ffs

  • bomb.technician.5 - 2012-07-17 16:01

    The rot of the cANCer continues..........

  • collins.makgopa - 2012-07-17 16:04

    How did the financial manager allowa the municipality to be in that situation? was there political interference which led the municipality in financial crisis...Atshe Afrika Borwa e ya morago jwale.

  • mpho.galane1 - 2012-07-17 16:12

    N they want to increase rates

  • Tishan - 2012-07-17 16:15

    so if they default on the loan, will the banks send the sheriff to reposess their furniture.. that is a huge amount, surely the banks wanted some sort of surity for this loan.

  • Imani - 2012-07-17 16:26

    But check the pay packages of the MM and CFO?

      jacob.siyanda - 2012-07-17 17:11

      How relevant is that? Is R150m shocking while we are sitting with a looming Euro debt crisis.

      devon.riley.52 - 2012-07-17 20:44

      Check the CV of the executive mayor, no skills, work experience or education whatsoever

  • nosiphom.mazibuko - 2012-07-17 16:27

    Are they collecting revenue from all who access services? What is this short term requiement - salaries, and rates and electricity - current expenses funded through aloan - if it were a business it would close its doors - not financially viable!

      Paul - 2012-07-18 06:39

      Please explain this to jacob siyanda ...

  • freddy.vanwijk - 2012-07-17 16:49

    The reason for borrowing? The taxpayer's money was not spent correctly. Neither did the municipality make any effort to recover outstanding money. Funds were underspent and kept back for no reason at all. Hence no service delivery and questions asked by parliament left unanswered. Why only ABSA and Standard Bank being the only banks funding the amount? Why not FNB, Nedbank & Capitek amongst others? Why must certain taxpayers foot the bill to pay bills of other residents who default? ABSA and Standard could lose the support of their long standing clients if this carries on. Why was there no action on the part of government? What collateral did Emfuleni Municipality put forward in securing the loan? This answer is simple. ZILCH!

  • vivian.harris.73 - 2012-07-17 16:55

    Another municipality up for administration....millions lost, wasted, stolen and nobody accountable as usual.....u can dress up an ape, still a ape though....

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