Twist to eThekwini Municipality’s debt crisis as government departments found to be major defaulters

Twist to eThekwini Municipality’s debt crisis as government departments found to be major defaulters. File picture: Independent Media

Twist to eThekwini Municipality’s debt crisis as government departments found to be major defaulters. File picture: Independent Media

Published Jan 17, 2022


DURBAN - GOVERNMENT departments are among the biggest defaulters, contributing the lion’s share to the spiralling eThekwini Municipality’s debt crisis. They owe the metro more than R1 billion for rates and services.

This is according to a report on municipal debt for the period between July and September 2021. It shows that the total government debt equates to R1 097 523 097, of which R106.3m is for the national government.

However, a government official has criticised this and other similar reports, saying they were misleading because they had been simplified and did not reveal the extent of what was owed, and why it was owed. Officials said some debts were listed not because the department was late in paying, but because there were questions about the debt.

The municipality revealed in its report that its overall consumer debt stood at close to R17bn. The issue of debt represents a growing challenge for the metro, with the trend showing an upward trajectory, and there are concerns that part of the debt amounting to billions of rand may be irrecoverable.

Opposition party councillors said there seemed to be no political will to address the issue.

“The total debt outstanding of R17.6bn represents an increase of R5.1bn compared with September 2020,” read the report.

“The R17bn includes R3.7bn which represents collection challenges that will take a longer period to recover. The challenges are due to slow/non-payment, legal disputes, and customer financial affordability,” it read.

The report breaks down the different categories of debt.

“Total government debt equates to R1 097 523 097, of which R106 391 212 is for the national government, R206 267 104 is for the Ingonyama Trust and R784 484 781 is for the provincial government. Total government debt includes annual rates that are due in October,” read the report.

The other debtors contributing to the debt challenge include rural water contributing R793 297 412, Tansnat is third with R689m, section 21 schools owe R289m and hostels owe R183m.

Parastatals owed R189m for the month of September, which is down from a high of R252m in July.

The municipality said it was taking measures to contain its debt, saying the measures, which include the extended Covid-19 payment relief plan, bulk SMS notification, and the gradual implementation of disconnections for non-payment, were still being implemented.

“As the economy begins to show encouraging signs of recovery after the impact of the pandemic, there is a long way to go before returning to preCovid-19 levels,” read the report.

Patrick Pillay of the Democratic Liberal Congress said it was unacceptable that the government was among those that owed the city.

“We have been raising this issue for many years with the municipality, and we keep getting the same answer, that they are negotiating with the government, and yet nothing is happening.

“Struggling residents get disconnected when they owe meagre amounts, and yet the government owes millions.”

IFP councillor Mdu Nkosi said the issue was not taken seriously by the ANC. “We see eThekwini going out to borrow money, yet they are owed billions,” he said.

DA councillor Thabani Mthethwa said that if the city had been stringent in collecting what it was owed by government departments, there would be no need for it to go into debt and borrow from lending institutions.

“If a resident is owing, they are disconnected. That is what should also happen to the government and parastatals that are owing. It’s clear that there is a lack of political will to address this issue,” Mthethwa said.

A government official, who declined to be named, said some of the municipalities were not honest in their business practices, and suggested that some government facilities should be exempted from billing because they serviced communities.

“They rate public facilities as though they are rating a private business. A department of health would build a clinic in a site and the municipality turns around and rates that clinic that is there to service people from that municipality.

“They rate schools, sport fields that are there to benefit their communities, so municipalities just want to behave like parasites that just take and take and do not contribute,” said the official.

Co-operative Governance and Traditional Affairs spokesperson Senzo Mzila said a task team led by the department was handling the issue of growing government debt.