ActionSA slams R3.8bn loan: 'Residents will carry the burden'

ActionSA has come out strongly against a proposed R3.8 billion loan from German state development bank KfW, which the ANC-led coalition is seeking council approval to secure for City Power. The party's Joburg mayoral candidate, Herman Mashaba, says the deal will deepen the city's already dire financial crisis rather than resolve it.

The loan, valued at €200 million, would bind Johannesburg to a 15-year repayment plan, with funds earmarked for City Power's electrical infrastructure across the 2025/26 to 2027/28 financial years. Mayor Dada Morero revealed the arrangement at his State of the City Address earlier this month, saying the city and City Power were currently finalising the contract with KfW and expected the funds to be disbursed before the end of June 2026.

But ActionSA is having none of it. Mashaba described the move as a "superficial and frenzied attempt to repair the mismanagement of the City of Joburg's finances," saying it "will not improve electricity supply" but instead "entangle the residents in an unaffordable loan agreement over a period of 15 years."

The controversy comes against the backdrop of a city in visible financial distress. Eskom says the City of Johannesburg and City Power currently owe more than R5 billion in arrears, with a further R1 billion due on June 5, 2026. Eskom has given the metro until 8 July to clear its arrears or face disconnections, a threat that could plunge residents into darkness during the height of winter.

The scale of the city's financial troubles goes beyond just its Eskom debt. Mashaba's statement pointed to over R23 billion in unauthorised, fruitless, irregular, and wasteful expenditure; a R71 billion debt owed by residents, businesses, and government departments due to weak revenue collection; and an unfunded R10 billion wage agreement with unions that National Treasury has instructed the city to halt.

Adding to concerns about governance, Mashaba highlighted that the extraordinary council sitting to approve the loan was convened without councillors having been presented with audited financial statements for the 2024/25 financial year.

"By law, financials should be submitted to Council by the end of January and approved by the end of February," his statement noted, calling it "astonishing" that this had not happened.

Finance Minister Enoch Godongwana has also weighed in on the city's troubles, with a letter dated April 23, 2026, in which he bluntly stated that the city is "effectively" bankrupt, though Morero has since disputed that characterisation, saying Godongwana relied on incorrect financial reports.

For ActionSA, the deeper problem is one of leadership, not liquidity. "Johannesburg does not have a financing problem," Mashaba said. "It faces a negligence and leadership problem of individuals who don't have the competence to uphold basic governance and fiscal discipline to manage the city effectively. Residents of Joburg deserve a competent administration, not endless borrowing."

ActionSA has a track record of opposing foreign loan agreements on these grounds. In 2024, the party's councillors rejected a R2.5 billion loan from French development agency AFD, citing the same concerns about burdening already financially strained residents.

Mashaba also raised red flags about the terms of the KfW agreement itself, noting that official council records authorise the City Manager to "negotiate and effect changes to the proposed loan agreement, should it be required to protect the City's interest." He warned that this means the city would be "negotiating from a position of weakness as it is already insolvent."

Those concerns appear to have resonated in the council chamber. On Thursday, the ANC and its coalition partners failed to secure the 136 votes needed to approve the loan. The Speaker of Council, Margaret Sheron Arnolds, said a further council meeting will be convened to put the matter to a vote again.

ActionSA councillor Steven Nkonyeni warned that repeated loans risked disappearing into city coffers without sufficient accountability, and demanded transparent reporting on all borrowing and repayments.

With local government elections on the horizon, the loan battle has become a flashpoint over the future direction of South Africa's economic capital. Mashaba framed the stakes in stark terms: "ActionSA will continue to demand accountability and responsible governance to ensure that Johannesburg does not become a symbol of collapse and dysfunction."

The ANC Greater Joburg Region has welcomed the City of Johannesburg Council’s approval of the R3.8 billion KFW Development Bank loan facility to strengthen and modernise the City’s electricity infrastructure through City Power.

Regional Secretary, Sasabona Manganye, said this important decision represents a significant step towards addressing Johannesburg’s ageing infrastructure challenges, improving the reliability of the electricity network, and enhancing the City’s long-term energy resilience.

“The investment comes at a critical time when the City must accelerate infrastructure renewal to support economic growth, improve service delivery and protect residents and businesses from electricity disruptions. The ANC Greater Joburg Region believes that strategic infrastructure investment remains central to rebuilding Johannesburg as a productive, inclusive and globally competitive African city,” Manganye said.

Manganye further welcomed the commitment to partnership between Eskom and the City of Johannesburg, which forms part of broader efforts to stabilise the energy sector and contribute meaningfully towards the turnaround strategy of City Power.

“These engagements are critical in strengthening revenue management, addressing operational challenges, improving electricity distribution efficiency and ensuring long-term sustainability within the City’s energy infrastructure ecosystem. The ANC believes that cooperation between Eskom and the City of Johannesburg is essential in resolving the longstanding electricity and financial challenges facing the municipality,” Manganye added.

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