DEBT collection agencies hired by the Msunduzi municipality to collect more than a billion rand from ratepayers have been paid almost R20 million in commission fees in the past 10 months but only collected R141m from customers.
DEBT collection agencies hired by the Msunduzi municipality to collect more than a billion rand from ratepayers have been paid almost R20 million in commission fees in the past 10 months but only collected R141m from customers.

Msunduzi debt collectors struggle to recover R1bn owned to city, collect millions in fees though

By Thami Magubane Time of article published Dec 22, 2020

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Durban - DEBT collection agencies hired by the Msunduzi municipality to collect more than a billion rand from ratepayers have been paid almost R20 million in commission fees in the past 10 months but only collected R141m from customers.

The 23 debt collection agencies earned R19.4m.

Councillors were irked by the figure paid to debt collectors saying they found the figure offensive because the council had its own employees who were supposed to be carrying out collecting processes. They were also not happy with the time it was taking to recover the money.

The revelations come as the municipality tries to clamp down on ballooning debt that has put it in a financially precarious position.

The administrator Scelo Duma revealed recently that the municipality was going after government departments that owed hundreds of millions of rand and its own staff that owed about R1m and councillors that owed about R292 000.

It has slapped deduction orders on its employees and councillors.

In August, the employees owed R4m and last month the council deducted R1.1m which has drastically reduced their debt. Last month, council deducted R39 000 from the salaries of councillors.

The municipality is also employing other forceful tactics to disconnect those who don't pay their bills and has hired more staff to carry out disconnections.

A report tabled recently by Duma said a total of R1.8 billion was handed over for collection by 23 debt collectors that were appointed on a three-year-contract last December. They are authorised to take legal action to recover the money.

“Between December 2019 and October 2020 a total of R141 006 088 was collected by debtors from accounts handed over; R19 458 840 (13.8%) was paid in commissions to the debt collectors for the same period.

“The most collected was R23m in January. The payments during the lockdown period have been very low.”

In April, R5m was collected, there was a slight improvement in May with R10m but this decreased to R8m in June.

In July the collection picked up to R11.9m, the August collection was R13.2m, September was R17.4m and October was R17.7m.

Duma said several interventions were being put in place to collect the debt.

He said the KZN Co-operative Governance and Traditional Affairs (Cogta) department and provincial Treasury had intervened to assist in the collection of government debt.

“The government debt outstanding as at 30 September 2020 was R233 120 943. The amount collected thus far is R22 636 669 (11%) and R184 684 935 (89%) is being investigated by Cogta and provincial Treasury,” he said.

Duma said the electricity department was concluding the employment of 25 internal staff to attend to disconnections. “This will eliminate the reliance of contractors to perform disconnections and reconnections,” he said.

A massive disconnection drive is under way. All residents with arrears debt are being disconnected.

“Plumbers have been brought into the Revenue Unit to restrict water supply. They are restricting water in the Lynnfield Park area, this area is supplied electricity by Eskom and the water is supplied by Msunduzi.

“These plumbers will complete the entire area and move to other Eskom-supplied areas. The disconnection drive is inclusive of government departments in arrears for services and also Section 21 schools,” he said.

ACDP councillor Rienus Niemad said council employees should be seeking arrear payments instead of debt collecting agencies. He said the councillors were not informed about the percentage that would be taken by the agencies for what was collected.

“We have council employees that are supposed to do this but they are not, and we have been forced to (look) outside.

Mayor Mzimkhulu Thebolla said the collection agencies’ payments were based on what they had collected. “We are concerned about the slow progress and they are not moving as fast as we had expected,” he said

The Mercury

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