Ganging up for loans

The City of Johannesburg wants all Gauteng's municipalities to pool their resources to fund infrastructure projects.

The metro yesterday hosted a conference in partnership with the Global Fund for Cities' Development to discuss forming an agency that would enable smaller municipalities to secure funding through partnerships with larger councils with greater financial resources.

Development finance institutions, banks and the government attended to discuss the shape that the new agency should take to meet the needs of the province.

Canada, the US, Japan, India, New Zealand, the UK and Australia are among the countries in which municipalities have begun pooling resources.

Since 2004, Johannesburg has issued eight institutional bonds and three retail bonds, yielding over R9-billion. But this is not enough to meet its ever-increasing population, which puts pressure on infrastructure.

Although larger metros can raise considerable amounts through bonds because of the strength of their balance sheets, municipalities such as Mogale City, West Rand District, Sedibeng, Randfontein and Midvaal are not able to do the same.

This reduces the local authorities' revenue and their ability to maintain and invest in essential infrastructure.

The SA Local Government Association supports the pooling of municipal resources.

Gauteng finance MEC Barbara Creecy said the Gauteng provincial government wanted to see more co-ordination on infrastructure projects.

But Global Fund for Cities' Development officials warned that the agency co-ordinating the collaboration would have to be free of political manipulation if it were to succeed.