By Dale Hes
Mbombela - The Development Bank of South Africa (DBSA) has granted a R160 million loan to help the Mbombela local municipality in Mpumalanga meet some of its service delivery targets.
The loan was finalised and signed on October 14.
“The signing of the loan agreement implies that the projects that are funded from the loan can now be undertaken or implemented,” said municipal spokesperson Joseph Ngala on Thursday.
Ngala said the loan will be used to fund the municipality’s capital expenditure programme and be divided into two sub-loans of R21.6 million and R138.6 million. The full amount, plus interest, needs to be repaid by 2028.
Ngala said R54 million will be used for water infrastructure and R10.6 million for a fleet of 28 vehicles to improve service delivery, while R17 million has been earmarked for the electrification of 2 035 houses in the municipality.
The remainder of the money will go towards waste management, technical services, sanitation and sewerage services and integrated human settlements.
According to DBSA Manager of Local Government Financing, Chris Baloyi, the bank has given more than R1 billion in lending support to Mpumalanga municipalities and key state agencies over the past 10 years.
“DBSA has a longstanding relationship with municipalities in the province of Mpumalanga. Over the past 10 years, the DBSA has provided financial and capacity building support to municipalities, valued at approximately R1 billion,” said Baloyi.
Baloyi said that Mbombela met the bank’s rigorous due diligence and credit risk assessment criteria.
“One of the key considerations for loan approval by DBSA was the ability of the borrower to repay the proposed amount. In approving the loan of R160.2 million, Mbombela demonstrated the ability to repay the loan to the satisfaction of the DBSA,” Malumbete explained.
According to the annual report for the 2012/13 financial year, the DBSA approved loans valued at R12.6 billion, with R3.2 billion allocated to South African municipalities.
The National Treasury has approved a R7.9 billion capital injection for the DBSA over a period of three years, from April 2013 to March 2016.
“This is specifically aimed at supporting the DBSA’s refocused mandate to drive its infrastructure funding by supporting municipal lending, the infrastructure plans of state-owned enterprises, regional lending and funding for public-private partnerships,” said Baloyi.
The report states that from March 31, 2013, the DBSA had development assets of R47.1 billion, spread across 13 Southern African Development Community (SADC) countries. – SAnews.gov.za
