A Gauteng municipality has borrowed R150 million from two commercial banks to pay its service providers.

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

R50 million was raised from Absa and R100 million from Standard Bank, with the municipality reportedly owing service providers R30 million.

Municipal spokesperson Paseka Rakosa told The Star newspaper last Monday: “We have approached financial institutions for a facility of R150 million 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.

Source: Sapa