City of Cape Town writes off R100m ‘bad debt’ in one month
Cape Town - The City of Cape Town has written off nearly R100 million as bad debt in one month alone.
Explaining the write-off of R97 577 627, Trevor Blake, the City’s director of revenue, said in a financial performance report in March properties with values up to R200 000 had R23 545 290 written off and those in the R200 001 to R300 000 band had R10 207 622 debt declared as bad.
Altogether, R5 902 110 was written off in respect of indigent users. “The total amount of debt written off for the month of March 2018 also includes amounts charged against indigent properties.
“Where debts were previously written off, however, accumulation of debt recurred as a result of water management meters not being set (administration error) and as a result of the water management devices’ communication failure (technical error),” Cape Chamber of Commerce chairperson Janine Myburgh said the City simply had to reduce its costs.
“City staff are all well-paid and the executive directors, for instance, are all due for a 7.1% increase, to take their salary packages to about R3.2 million a year and more in the case of the municipal manager and the executive director of finance. Pay increases like this are simply crazy and something drastic has to be done,” she said.
Myburgh said it should be possible to cut costs in the vast municipal bureaucracy, which now numbers more than 27 000 if temporary staff are included.
“In the private sector most companies have been able to reduce administrative staff because we now have computers to do a lot of the work. Prepaid electricity meters mean fewer meter readers, a shrinking number of electricity accounts, less bad debt to chase up and cash in advance.”
Blake said public housing rentals and loans debtors of the City with respect to residential properties also ran high arrears bills. The total arrears for council rental stocks for February was R655 387 315, rising to R657 936 423 in March.
Public housing loan arrears increased from R171 575 212 in February to R172 028 850 in March. At the end of March, property management debtors, which comprise commercial, industrial and residential properties leased to private entities, individuals and the government, were also behind with payments. For March the arrear debt was R53m.
Blake said in dealing with active accounts with current leases, disconnection or restriction of services would be implemented in order to enforce the collection of debt.
“We are also limiting blocking of electricity prepaid meters. Collecting the lease debt and other debts via the prepaid electricity meters and issuing of letters of demand leading to adverse credit listing are all part of our work. Adverse credit listing forces debtors who are actively credit users to settle their debts; otherwise they cannot enter into any other credit or loan agreements,” Blake said.
He said where the debtors were not traceable, the debt would be written off as bad - irrecoverable under “the untraceable” reason code. “However, a tracer will be inserted at the relevant credit bureau and the adverse credit list will assist in recovering the debt and tracing if the debtor is an active credit seeker.
“Where debtors are traceable and there is no response to the debt management actions taken, the accounts will be handed over for legal action which could lead to the issuing of default judgment against the debtor,” he said.