Collection rate plunge puts budget under threat

NELSON Mandela Bay’s revenue collection rate dropped six percentage points below its targeted 94% last month, placing the city’s budget for the current financial year in jeopardy.

The metro’s chief financial officer, Trevor Harper, blamed the major decline to 88% on a sluggish economy, saying unemployment was high and people simply did not have the money to pay.

Should the municipality not improve its collection rate to 94% over the next few months, it would struggle to pay its employees and service providers like Eskom, and service delivery could take a knock.

The 2016-17 financial year came into effect last month. The budget was compiled based on a 94% collection target.

Harper said a six percentage points drop in the target for the entire year would amount to about R378-million.

The metro’s recent undertaking to add 23 000 residents to its indigent list was not to blame for the drop as they had not been paying anyway, he said.

The newly appointed political head of budget and treasury, councillor Retief Odendaal, said the 88% collection rate was the lowest it had been in years.

“We’re way off target and that can have serious repercussions for the budget.

“We have to look at the credit control policy and see what can change and where we are dropping the ball,” Odendaal said.

The new political bosses would be strict with consumers who did not pay their bills although they could afford to, he said.

Harper said a revenue enhancement programme had been in place since April and results should be seen in the next six months.