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Est 2009 Issue 4 - 2015
29 January - 5 February 2015
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Mayor calls for pooled financing ‘Challenges such as limited capacity in our municipalities to access financial markets and the cost of servicing the borrowing remain barriers to easily accessing these markets’ Staff Reporter news@inner-city-gazette.co.za
J
oburg Mayor Parks Tau has called on the finance and business community to partner with municipalities to invest in infrastructure development. Mayor Tau made the call on the first day of the three-day Innovating in Financing South African Cities Conference at the Sandton Convention Centre on Thursday. “With the global economic slowdown hampering municipalities’ revenue targets and thus the ability to finance most of the infrastructure on the balance sheet, it then becomes critical that we address these challenges collectively,” he said. The City, which is leading a new push in the quest for African cities to
Gauteng Finance MEC Barbara Creecy, Mayor Parks Tau and Joburg Finance MMC Geoffrey Makhubo at the conference.
find sustainable ways of financing infrastructure development projects, has partnered with the Paris-based Global Fund for Cities Development (FMDV) to host the conference. About 100 local and international delegates are attending the gathering to explore appropriate “pooled financing mechanisms” (PFMs) to help African cities create alternative funding sources for infrastructure development, which is central to unlocking the economic development of the country’s big cities. Mayor Tau, who is also the co-president of Metropolis, a global association of major cities and metropolitan regions and chairman of the South African Local Government Association, said in the face of the continuing global financial pressures, smaller municipalities were
affected by declining budgets to fund infrastructure projects. This had resulted in cities struggling to collect muchneeded revenue from their customers. “The harsh reality in South Africa today is that the small- and medium-sized local government entities, as well as municipalities, need long-term financing at a reasonable cost for a number of infrastructure projects. Most urban infrastructure projects have been financed by the state up now,” Tau said. The Mayor said he hoped the conference would come up with innovative solutions as far as PFMs were concerned. “Economic development is high on our priority list and the onus is upon us as political leaders, national government, municipalities, banking institutions, regulatory bodies, those in the business
world and the other stakeholders present here today, all of whom have the interest of our cities at heart, to ensure that the goals that are set are attained and sustained. Central to this is infrastructure development, the key to the development of our economy,” he said. Mayor Tau said the ability by municipalities to access capital markets was made possible by the enabling legislative environment. Local capital markets may be a more adequate and sustainable source of financing for local government. However, challenges such as limited capacity in our municipalities to access financial markets and the cost of servicing the borrowing remain barriers to easily accessing these markets.” Gauteng MEC for Finance Barbara Creecy assured investors that the pro-
vincial government was committed to working with the City and the private sector to build the province’s infrastructure through public-private partnerships. “Both the public and private sectors can play an important role in financing infrastructure investment. The National Development Plan emphasises government’s willingness to take the lead in prioritising infrastructure investment,” said MEC Creecy. She said to achieve faster economic growth and higher employment, the country needed to promote higher levels of capital spending. Over the next three years Gauteng, together with its combined metros, would spend more than R94-billion on social and economic infrastructure projects, Finance MEC Creecy said. joburg.org