SA’s largest municipalities write off billions in debts of struggling residents

The City of Johannesburg and the City of Cape Town have extended their debt relief programs until the end of June 2022.

  • The City of Johannesburg and the City of Cape Town have extended their debt relief programs until the end of June 2022.
  • Cape Town has canceled 2 billion rand of historic debt so far and has an additional 2.1 billion rand available if more residents apply.
  • Johannesburg will quantify the value of debt forgiven at the end of its program, but more than 20,000 residents applied and 16,393 passed.

Municipalities are not always the preferred service providers of South African consumers, sometimes coming under fire for delivering poor quality services; billing errors that can cost account holders hundreds of thousands of rands in legal fees to resolve; or sometimes frustrating experiences in service centers.

But some of the country’s large metropolitan municipalities are also showing humanity. At the height of the pandemic, Cape Town, City of Johannesburg and eThekwini embarked on campaigns to cancel millions of rand owed by struggling residents.

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eThekwini Municipality quickly resumed credit monitoring and debt collection processes as soon as SA lowered foreclosure levels in July 2020.

But the people of Johannesburg and Cape Town still have a chance to get some of their historic debt forgiven, as long as they meet their current municipal payments.

The city of Jobourg

The City of Johannesburg initially launched its debt rehabilitation program in May 2021. It has extended it twice. The last stage started on March 1, 2022 and will end on June 30, 2022.

Residential account holders with a combined gross income between R4,750 and R22,000 per month are eligible. But even households with incomes over 22,000 rand per month can still get a percentage of their debt outstanding for more than 90 days if they settle their accounts in full. But for everyone, the market value of the property that owes money to the municipality should not exceed 1.5 million rand.

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Small businesses and faith-based organizations were invited to apply. Eligible customers will receive 50% debt cancellation, with additional cancellation of outstanding debt over a three-year period.

The city’s director of communications and stakeholder management, Kgamanyane Mapholo, said that between May 1, 2021 and the fourth week of March 2022, the municipality received 20,043 applications for its debt rehabilitation program. .

Of all the clients who applied, 16,393 were approved and had some of their debts forgiven in accordance with the terms and conditions of the program.

But Mapholo said the City of Johannesburg will confirm full financial assistance to clients upon completion of the program and once affected clients are fully rehabilitated.

Cape Town

The Mother City Municipality said it has put in place a full range of financial aid options for struggling Cape Town residents. These include a R4.1 billion debt cancellation incentive for tenants and R3.4 billion for indigent relief and ‘interest-free’ payment agreements with overdue customers. of payment.

The debt cancellation incentive program started in May 2021 and nearly R2 billion has been canceled so far. Another R2.1 billion will be written off if more eligible residents apply by June 30, 2022.

Customers who arrange to settle their debt can have their debt written off prior to July 1, 2018. But the City of Cape Town (CoCT) will reinstate that debt if a customer fails to meet their payment plans.

CoCT municipal committee member for finance, councilor Siseko Mbandezi, said the incentive did not put the municipality in financial hardship. But it helps the CoCT show troubled residents that it cares. He said the municipal account’s 12-month payment ratio was 97.4% on February 28, 2022.

“[This] indicates that most ratepayers are able to pay their municipal bills. Those unable to pay are encouraged to contact the city for assistance,” Mbandezi said.

He said while instilling a culture of payment for city services was key, “showing that the city cares about its residents” was also vital.


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