Municipalities can realistically only collect 37 billion rand of debt of 231 billion rand

Through Loyiso Sidimba 19h ago

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ONLY about R 37 billion of the R 231 billion owed by consumers, including households, businesses and government, for services provided by the country’s 257 municipalities can realistically be recovered.

The National Treasury revealed this week that the country’s eight metropolitan municipalities owed R115.4 billion as of March 31, with Johannesburg‘s share of debt now standing at nearly R35.6 billion, followed by the Ekurhuleni metro with about 19.5 billion rand, the city of Tshwane. (17.55 billion rand), 15.4 billion rand for eThekwini as well as Cape Town with just over 9.2 billion rand.

Total consumer debt owed to the country’s largest municipalities was around R88.1 billion during the same period last year.

According to the Treasury, at the end of March this year, the total municipal consumer debt was R 230.7 billion and it stood at R 230.5 billion as of December 31, 2020.

Almost 74 billion rand were written off as bad debts.

The figures also show that the government accounts for 6.7% or 15.5 billion rand, which is down from the 20.7 billion rand reported at the end of December.

The Treasury also noted that households still represent the largest component of debt to municipalities at 72.5 percent or 167.3 billion rand compared to 166.5 billion rand six months ago.

“It must be recognized that all of the outstanding debt of R 230.7 billion cannot be realistically collected, as these amounts include debts older than 90 days, interest on arrears and other collections,” it says. the report on local government revenue and expenditure for the third quarter of fiscal year 2020/21.

Debt over 90 days is historical debt that has accumulated over an extended period of time.

However, the National Treasury has warned that this should not be interpreted as implying that the balance must be amortized by municipalities.

“If consumer debt is limited to less than 90 days, the actual amount to be collected is estimated at R36.5 billion,” the Treasury explained.

About R 23 billion of the R115.4 billion consumer debt owed to the eight subways is less than 90 days old.

Free State municipalities have the most unpaid creditors over 90 days at R15.4 billion, followed by Mpumalanga with R12.3 billion and Gauteng at R6.6 billion.

Gauteng finance and e-government MEC Nomantu Nkomo-Ralehoko on Thursday announced that the provincial government has paid more than R 6.1 billion to municipalities for property rates and taxes since fiscal year 2018/19.

Provincial government debt has paid an average of R 2 billion per year, which has also increased by over R 200 million per year during this period.

Nkomo-Ralehoko said provincial government debt now accounts for the smallest portion of unpaid debtors to municipalities, accounting for around 2% in total.

She pledged that Prime Minister David Makhura’s administration would continue to help municipalities facilitate the payment of public debt and redouble efforts to ensure that arrears are significantly reduced during the current fiscal year.

The SA Local Government Association (Salga) believes that there is a clear link between the ability of municipalities to service their debt, in particular to the Eskom electricity utility and water services, and their inability to collect electricity. government, business and household services provided.

Salga told municipalities that due to the situation becoming untenable for municipalities constantly threatened with disconnections by Eskom and water boards, they should consider targeting government properties and businesses, disconnecting them where there is. sufficient merit and in accordance with their credit control policies.

The association also plans to conduct a rigorous analysis of the gross debt owed to municipalities, establishing the debt collectable realistically and what can be considered for write-off or repeal as historically uncollectible, including using it. as a basis for negotiating the installation of prepaid meters.

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