The bank last week reported an increase to 474 in the number of loans to municipalities in the financial year to March 1999. In the year to March 1998 the bank advanced loans to 452 municipalities. This contrasts sharply with those for the year ending March 1996 and March 1994 when 93 and 56 municipalities respectively were DBSA clients. The bank's figures also highlight an increase in its activity in the Southern Africa Development Community regions. Chairman Wiseman Nkuhlu writes in the report that it is crucial to the success of the subcontinent that big cities meet the dual challenge of expanded service provision and global competitiveness.
Municipalities are a central pillar in delivery of social services and creation of jobs.
The DBSA's relationship with local government contrasts with private institutions' lack of interest owing to perceived risk. Private sector players cite authorities' inability to collect revenue, to meet repayments on infrastructure loans, and their lack of financial systems as risk factors. The riskiness of local authorities was highlighted recently when Jackie Manche, chief director for local government finance in the Department of Provincial Affairs and Local Government, told a local government conference that almost half of SA's 843 municipalities faced financial problems and that 151 were in fullblown crisis. He also said residents owed municipalities a total of R12.4-billion. Ian Goldin, DBSA chief executive, says the bank has no write-offs, which suggests it is doing something right.