R165.5bn owed to municipalities – Salga
THE SA Local Government Association says it is realistically able to collect only about R40 billion of the R165.5bn owed to municipalities by consumers, government and businesses.
Salga yesterday revealed the shockingly high debt, and stated that some of it dated back to apartheid-era consumer boycotts.
“It is less than R40bn of this total that is realistically collectable,” said Salga chief executive Xolile George.
George explained that “realistically collectable debt” was debt which could be recovered within three months.
“When a customer can’t pay within 90 days, that debt is deemed irrecoverable. You will recall that in 1996 there was the launch of a programme called Operation Masakhane; essentially it was about creating a culture of payment of municipal service debt, and this was the position of the democratic government responding to previous organised resistance to the system,” he said
George added that black communities had been mobilised not to pay for services in the apartheid era.
The spiralling debt was in part due to accumulating interest. Some municipalities owed Eskom up to R25bn, as well as around R15bn to water boards and the Water Trading Entity.
Salga president and Polokwane mayor Thembi Nkadimeng said municipalities were owed R165.5bn as of June this year. In the previous financial year the total stood at R143.2bn.
Households owed R118.6bn, the largest part of the debt. “Metros’ consumer debts account for 49.7% of the total consumer debt of R165.5bn, of which government debt constitutes approximately R10.5bn and businesses’ constitutes approximately R23bn,” said Nkadimeng.
She warned that if the debt was declared uncollectible and had to be written off, pre-paid meters would be installed in households.
One of the drastic steps Salga has taken to reduce the level of debt is advising municipalities to urgently and aggressively enforce credit control management measures, and target government properties and businesses with disconnection where there is sufficient merit, in line with their credit control policies.
Salga also wants municipalities to conduct a rigorous analysis of gross debt and to restructure debts to see which debt was realistically collectable and which should be written off.
”If consumers pay municipalities, municipalities will not owe Eskom, will not owe water boards. They will be able to sufficiently service their service providers,” Nkadimeng said.