New policies for council debt repayment needed

Municipalities will have to change their debt-repayment and recovery policies to avoid falling further into the red. According to figures released recently by the Department of Co-operative Governance and Traditional Affairs, municipalities around the country owe creditors more than R15.2bn. Of this, R9.5bn is overdue debt and R5.6bn current debt. However, the real danger lies in the more than R100bn which municipalities are owed by various debtors, including residents and businesses as well as provincial and national government departments. While municipalities’ creditors, including service providers, businesses and state utilities charge municipalities interest on debt 15 days after an invoice, municipalities are only able to charge interest 30 days after invoicing, meaning their debt grows faster than they are able to recover debt owed to them. Responding to a question from DA MP Kevin Mileham, Co-operative Governance and Traditional Affairs Minister Des van Rooyen outlined the d...

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