Johannesburg mayor Thapelo Amad is in hot water after remarks that he had secured the prospect of a R9.5bn loan facility to address service delivery initiatives in SA’s biggest metro.
The cash-strapped municipality has been battling low revenue collection that has been worsened in the aftermath of the Covid-19 pandemic. Revenue collection in the city, which has a budget of R77.3bn for the 2022/23 financial year, was R500m lower than targeted by October.
The financial problems resulted in the city temporarily failing to pay service providers, leading to fears it could also struggle to pay its 32,000-strong workforce or honour its service delivery obligations to its 6-million residents.
In February, the municipality approved a R2bn loan from the Development Bank of Southern Africa to finance operations, including its R900m monthly salary bill.
In a recent interview with the SABC’s Sakina Kamwendo, Amad said: “I was in a meeting with one of the stakeholders ... I was able to secure a prospect of about R9.5bn, where this company says: ‘We are willing to give you this loan, but it will come in a form of a finance model. It comes at an interest rate of about 2%. You only pay 2% for a period of about two years, without paying the amount of the loan. It’s only the percentage. Then after five years, you will pay for the next 15 years.’”
Amad said the R9.5bn loan would be used for “service delivery issues; it is for technologies, for a smart city”.
In a statement after the interview, the city said Amad’s comments were made in reference to various discussions under way, and the “numerous unsolicited proposals that have been directed to the city from a variety of stakeholders”.
“The loan proposal referred to is but one of many unsolicited proposals advanced to the city following widely published reports on the city’s financial difficulties following the Covid-19 pandemic and its subsequent economic impact on ratepayers and the city,” the statement reads.
“The mention of the R9.5bn loan facility was made as a mere example of the proposals received and not stated as a final and concluded deal of the city. It was used within the context of the interview to demonstrate a collective will by the city leadership to steer Joburg and the inner city towards growth and development.”
The metro processed all proposals in line with the legal prescripts applicable to local government, and the mayor and his committee “remain committed to realising a thriving city with stable finances, efficient delivery of services and an improved standard of living for the residents of Joburg”.
In a statement on Tuesday, DA councillor Mpho Phalatse described Amad as the “mayor of the puppet-led administration” in Joburg. “[He] indicated his personal involvement in procuring a R9.5bn loan for the city. He has also indicated that it’s a done deal. We note his subsequent denial but his original statement must be taken at face value and must be investigated”.
Phalatse, who was ousted as mayor in January after losing a confidence debate, said Amad had no business getting involved in administrative processes. “This is criminal and requires investigation. The DA caucus in Johannesburg will ensure that this instance of corruption is uncovered and dealt with,” she said.
“The mayor is in way over his head and he should have allowed city officials to manage administrative processes in line with relevant legislation and the constitution. He made his statement on the nation’s public broadcaster. At worst, he has potentially committed an act of crime, at best he is unfit to hold office.”
Patriotic Alliance (PA) leader Gayton McKenzie posted on social media on Tuesday: “We must put the citizens of Joburg first and admit we have backed the wrong horse. Thapelo Amad has been asked to climb a mountain too high for him. It’s not just harming Joburg, it’s destroying him too. We will rectify this blunder. Amad should resign now. We apologise profusely.”
ActionSA Gauteng chair Funzi Ngobeni said: “We will be submitting a motion of no confidence on the executive mayor today [Tuesday]. We are not surprised by the PA saying what they are saying. The mayor is not up to standard in terms of the position that he is in. It was a terrible mistake for him to be elected mayor.”
Ngobeni said the motion will be discussed during a council meeting on April 25.
Amad is a councillor for Al Jama-ah, which has three seats in the 270-seat Joburg council. He is in a coalition with the ANC, the PA, the EFF, GOOD, COPE, the ATM, the APC, the PAC and the AHC.
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