Cape Town - The South African Local Government Association (Salga) has blamed municipal customers who do not pay their bills on time for adversely impacting the financial health of municipalities.
Last week, a report by Auditor-General Tsakani Maluleke said up to 64% of the outstanding municipal debt nationwide was irrecoverable.
Reacting to the AG’s report, Salga called for action to restructure the municipal debts.
Salga said this could be done by the enactment of a National Write-Off Bill which they said would “extinguish the irrecoverable portion of the debtors’ book.”
Salga spokesperson Sivuyile Mbambato said in the statement that, as of March 31 this year, municipalities were owed R255 billion for services consumed.
He said Salga was reiterating its call made at its national conference in March for municipalities to be consistent in implementing their credit control policies to tackle the increasing debtors’ book and a call to municipal consumers to honour their municipal bills.
Launching the 2020/21 consolidated general report on the local government audit outcomes, Maluleke said: “Local government finances remain under severe pressure due to non-payment by municipal debtors, poor budgeting practices and ineffective financial management.”
Maluleke said that while the economic downturn had affected revenue collection, municipalities were also to blame for not playing their part. She said that not all revenue owed was billed and poor debt-collection practices were common.
She said this situation effectively meant that such municipalities did not have enough revenue to cover their expenditure.
“They owe more money than they have and they can no longer pay salaries and other obligations as they fall due, or maintain infrastructure assets such as roads and provide water and other basic services.”
In Cape Town, the City offers rates and services relief, subsidised services to indigent residents and financial assistance in the form of interest-free payment arrangements to residential and commercial customers who have been adversely affected by the Covid19 pandemic and national lockdown.
The City said while it cannot provide blanket relief, it would dispense R3.75 billion in rates and tariffs relief to qualifying residents in the new financial year, which starts on July 1.
Mayco member for finance Siseko Mbandezi said the City’s policies aim to accommodate and assist everyone according to their income level.
He said all qualifying residents who are struggling to pay their municipal accounts should approach the City for assistance as the City evaluated each case according to the circumstances and policies which were in place.
Mbandezi said the City has a payment ratio of about 98%, which means the majority of customers are paying their accounts.
“In addition to the indigent and rates relief on offer, the City in 2021 embarked on a debt write-off and payment incentive project, whereby debt prior to July 1, 2018 was written off, on condition that an arrangement was entered into to pay more current debts.”
He said more than R2bn in old debt had been written off so far and a further R2bn was still available until June 30.