Joburg’s debt-collecting service providers are livid after going months without being paid due to the city allegedly being “broke”.
This, they said, was crippling their businesses and could lead to them having to retrench some of their staff.
This appears to contradict mayor Herman Mashaba’s ambitious goal to achieve 5% economic growth in Joburg by 2021 by creating an environment for small and medium-sized businesses to thrive.
The Star spoke to four firms, which are part of Joburg’s attorney debt-collection (Attcol) panel. They collect between R400million to R500m a month in historical debt, according to internal city records The Star has seen.
An irate attorney, who said he was owed over R5m, claimed his firm had not been paid since September and had received only partial payment for his September and October invoices. He was yet to be paid for November, December and January.
He said this was crippling his business. He has overheads and expenses of up to R400000 a month, which he said he has been unable to meet as a result.
“We are looking at retrenching around 30 employees. It’s bad. We get the money in for the city and we should not have to wait for months without our invoices being honoured,” said the attorney, who asked to remain anonymous.
Another panel member said it was unfair that they continued debt-collecting for the city which receives the money straight into its account, but that they don’t get paid.
“I have been asking them what the problem is, but I don’t get a straight answer.
“However, I have been reliably informed that the city does not have money. Apparently they ran out of money as far back as December,” said the lawyer, who also requested anonymity.
He claimed he was also owed about R5m.
His contentions were supported by a senior source within Joburg’s finance department, who said the city would not honour its R3billion short-term loan from the Development Bank of Southern Africa (DBSA), with the loan repayments due in June.
But mayoral spokesperson Luyanda Mfeka rubbished assertions that Joburg was broke, referring to the auditor-
general’s report, which stated that the city had closed the financial year with cash and the cash equivalent of R3.1bn.
Mfeka said delays in paying Attcol panellists were the result of their contracts coming to an end. The contracts had been extended since 2015.
He added that this breached competitive processes as the city had to undergo a process to “legitimately re-establish the Attcol panel”.
“During this period, Attcol payments could not be made, as that would have contravened the provisions of the Municipal Finances Management Act (MFMA). It is also worth noting that the city was in regular contact with the panellists during this period,” Mfeka said.
But another lawyer disputed that they were being informed regularly and provided The Star with a slew of emails with city officials from November to December, asking them when he would be paid, without receiving a definitive answer.
Mfeka emphasised that the city would repay its R3bn DBSA loan before the end of June, saying the loan was accessed to “mitigate working capital mismatches”.
“These capital mismatches include nearly R1bn in losses inflicted on the city by the national government, shortly after taking office,” Mfeka said
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