Municipalities reach record levels of outstanding debt
NON-PAYMENT of rates and utilities has wracked up municipal debt to billions of rands, impacting service delivery.
This was the stark reality shared by KZN Salga Chairperson, Thami Ntuli during Thursday's press briefing in Durban.
Ntuli said citizens, government and businesses owe municipalities huge sums, primarily for water and rates.
“When homeowners use all their disposable income to service bond repayments, they need help keeping up with rates and taxes.
“Government departments owe municipalities more than R3-billion.
This is happening for the first time in the history of this province.
“When government and businesses fail to pay or delay paying for the water, lights, rates and refuse removal services, municipalities often have to secure commercial bank loans to ensure that projects do not grind to a halt,” Ntuli said. He added that municipalities do not 'operate in a sanitised environment', with the 'prevailing political environment' impacting every community.
“It is commendable that over 84.4% of households have access to electricity, and over 76.4% of households have access to piped water. These achievements are despite severe problems.”
Ntuli noted that interest rate hikes have increased debt service costs for municipalities, which 'could divert funds from essential services and infrastructure development'.
“This reduced the borrowing capacity of municipalities, making it more challenging to fund infrastructure projects and service delivery.
“Higher interest rates have reduced consumer spending, negatively impacting local businesses and the overall economy, further straining municipal finances.”
Hikes in utility rates were also cited as reasons for customers defaulting on payments.
“On 13 November 2023, Umgeni-uThukela Water formally proposed bulk tariff increases of between 9.5% and 14.3% for the financial year 2024/25.
“Also, when Eskom is granted tariff increases, it is a big blow to the entire economy and municipalities.
“Year after year, Nersa approves high Eskom tariffs for bulk electricity, negatively impacting municipalities' revenue.”