The affordable education loan option
Durban - The eThekwini Municipality is owed more than R2 billion for services - with government departments being among the worst culprits.
The figure emerged on Tuesday as the city revealed plans to borrow R1.5bn to fund capital projects over the next three years.
A budget statement report presented to the council’s executive committee on Tuesday showed that provincial and national government departments owed the city nearly R142 million, while businesses owed R196m.
The biggest defaulters were residents, who owed more than R1.6bn.
Among the government departments, the Department of Housing was the biggest offender, owing more than R36m for water and electricity, followed by the Department of Education, whose schools owed more than R27m.
DA councillor Zwakele Mncwango said the city should disconnect services to departments that did not pay, just as it did with ratepayers.
ANC councillor Fawzia Peer objected to this, saying the last thing the city should do was disconnect schools’ water and electricity supplies.
“We cannot do that to our kids,” she said.
Mncwango then suggested that the department’s offices be disconnected if schools fell behind in paying for services, but deputy mayor Nomvuzo Shabalala said that this would be improper.
Patrick Pillay, of the Minority Front, said government departments should not burden the city’s ratepayers with unpaid bills.
“We are a sphere of government and other government departments should not burden ratepayers with this sort of debt. This city should not be taken for granted,” he said.
DA councillor Heinz de Boer said the city should aggressively target businesses that did not pay.
“We should apply the same principles to big business as we do to ratepayers, and cut their services. If we cut their electricity and their business did not run for one hour, I can guarantee that they would pay the bill,” he said.
At the same meeting, city manager S’bu Sithole said eThekwini needed to borrow up to R1.5bn to fund major projects over the next three years.
He said the decision to allow the city to borrow the money should be taken in the light of its not having borrowed any money in the past two financial years.
It was anticipated that the capital budget for 2013/14 would be fully spent, a report to the executive committee stated.
“This will put strain on the cash resources of the municipality. Consequently, it may be necessary to increase the forecast borrowing amount of R1bn… hence the request to borrow up to R1.5bn,” the report said.
Mncwango said that borrowing “was not the best practice” and the city should try to recover the R2bn it was owed.
“If we recovered the R2bn we might not have to take the loan. Taking a loan is not a bad thing, but can we at least try to recover the R2bn that is owed?” he argued.
Peer said that the DA should realise that running a municipality was like running a business.
“You cannot expect to recover debts before you do planning. That is not good thinking,” she said.
De Boer said he had no objection to the city borrowing money, but he hoped the money would be used to fund worthwhile projects instead of projects that were “politically expedient”.
Council Speaker Logie Naidoo urged the treasury department to look at other entities, such as the Development Bank of Southern Africa, to get a good rate and not simply approach major commercial banks for a loan.