INCLUSIVE GROWTH
Dam loan guarantee is early test for Gigaba’s commitment to action plan
The department’s own documents make it clear the project as it is now envisioned will not be financially viable
Finance Minister Malusi Gigaba faces an early test of his commitment to his 14-point action plan for inclusive growth. He is being asked to guarantee a Chinese loan for construction of a dam on the Mzimvubu River in the Eastern Cape, but must have been hoping no one would notice. The Department of Water and Sanitation’s own documents make it clear that the dam will never be financially viable as conceived at present. Nor will it meet social or economic objectives in a cost-effective or rapid way. It will require ongoing subsidisation to repay the loan and to fund its operation. Yet point four of the Gigaba action plan states categorically that it aims to "reduce the issuance of government guarantees, especially for operational reasons". As it stands, this is a classic social project that should be funded from budgetary resources. Using loan finance is simply a device to evade budgetary scrutiny. Currently budgeted at more than R14.7bn, this project is surely in need of scrutiny. The...
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