The City of Cape Town has signed a R2.4 billion loan credit facility agreement with a French development bank, which will assist it in financing infrastructure projects identified in the Integrated Development Plan (IDP) for the next five years.
These infrastructure projects include the expansion of the MyCiTi bus services to Mitchell’s Plain and Khayelitsha, a range of capital projects, and the construction of community facilities such as clinics, parks, and libraries in previously disadvantaged communities.
Executive Mayor, Alderman Patricia de Lille, said the signing of the agreement with L’Agence Française de Développement (AFD) on Monday, 18 February 2013, was the “culmination of two years of intense negotiations between both sets of officials to ensure that the terms of the credit facility agreement are fair to both parties”.
The Mayoral Committee recommended to Council in June 2012 that the loan be entered into. The agreement terms stipulate that the loan be repaid over 15 years, with an expected interest rate of 5.6% to 5.8%.
De Lille said Cape Town is grappling with limited resources in meeting the demands of rapid urbanisation and addressing the longstanding legacy of apartheid spatial planning. The City invests a large portion of its capital budget on building new infrastructure where it is needed most, as well as maintaining existing infrastructure in order to deliver basic services without interruption.
The City has a capital budget of R6 billion for the current financial year. In the last financial year, which ended on 30 June 2012, the City announced its capital expenditure amounted to R4.17 billion, comprising 91.4% of its capital budget of R4.56 billion.
“While we do our best to manage our finances as prudently as possible, the reality is that our own sources of revenue are not enough to meet the service delivery expectations of all residents. This is why we seek additional funding from external sources that share our vision to be the leader in municipal service provision in the country.”
She said she was grateful that the City’s finance team secured the loan, and was grateful that the teams of negotiators reached an agreement on a “reasonable interest rate” for the repayment of the credit facility.
“You can be rest assured that your money will be put to good use. It will go towards improving the quality of lives of the people of Cape Town and making this great city even greater.”
The Ambassador-Designate of France in South Africa, Her Excellency Ms Elisabeth Barbier, the Consul of France, Mr Antoine Michon, AFD representatives, and City officials were present at the signing.
