Salga ponders drastic steps to end municipal debt mess
THE SA Local Government Association (Salga) says it is only realistically able to collect R40 billion of the total R165.5bn owed to municipalities by consumers, government and businesses.
Salga yesterday revealed shocking figures of debt owed and stated that some of it dated back to the apartheid-era consumer boycotts.
Salga chief executive Xolile George said the debt had been accumulating before 1994.
”It is less than R40bn of this total (R165.5bn) that is realistically collectable,” he explained.
George said the “realistically collectable debt” was debt which can 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, 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 of the system,” he said.
George added that black communities were mobilised not to pay for services.
”This accumulation has been going on since then with relative success in other areas,” he said.
According to George, the spiralling debt was due to the interest that had accumulated over time.
Some of the country’s 257 municipalities owe Eskom up to R25bn and another 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 amount stood at R143.2bn.
The largest component of debt related to households which owed R118.6bn while government’s outstanding debt was R10.3bn.
”Metro consumer debts account for 49.7% of the total consumer debt of R165.5bn, of which government debt constitutes about R10.5bn and business constitutes about R23bn,” said Nkadimeng.
She also warned that if debt was declared non-collectable and had to be written-off, pre-paid meters would be installed.
Some of the drastic steps Salga has taken to sort out the mess include advising municipalities to urgently and aggressively enforce credit control management measures, including targeting government properties and businesses through disconnection where there was sufficient merit in line with their credit control policies.
Salga also wanted municipalities to conduct a rigorous analysis of the gross debt and restructure debts to see which debt was realistically collectable.
“If consumers pay municipalities, they will not owe Eskom, will not owe water boards. They will be able to sufficiently service their service providers,” Nkadimeng added.
Salga was also unhappy that Finance Minister Tito Mboweni cut the local government equitable share during his Medium-Term Budget Policy Statement by R3.2bn and conditional grants by R14.2bn or on average by 11% over the next three years.
The association believed that municipalities should not suffer due to the systematic and structural issues caused by the deficit in collecting national revenue, but instead more stringent efforts be put in place to ensure that local government was enabled to carry out its mandate.