Municipalities owed nearly R10bn by national and provincial departments

The R9.7bn debt owed to municipalities by national and provincial government departments remains a major challenge, says co-operative governance and traditional affairs minister Zweli Mkhize.

In a written reply to a question from the IFP in parliament, Mkhize said the debt continues to grow due to accruing interest and insufficient funds allocation to service arrears.

“Some of the reasons [for the increasing debt] include insufficient budget allocations by organs of state to service current-year debt and historic debt,” the minister said in the reply published on Tuesday.

Many of the affected municipalities have been struggling to meet their own payment obligations. Cash-strapped Eskom is owed more than R14bn by municipalities, with the top 10 non-payers owing about R10bn. In turn, municipalities are owed R139bn by residents for services.

Some residents have attributed their failure to pay for electricity to high levels of unemployment and poverty. Eskom has previously threatened to cut off supply to the municipalities.

In his written reply, Mkhize said his department, in collaboration with National Treasury, has structures in place to assist municipalities to recover the amounts owed by organs of state and to facilitate the resolution of disputes.

“These structures discuss the debt owed to the municipalities; evaluate progress on the reconciliation of inter-governmental debt undertaken by municipalities and organs of state; billing challenges; progress on payments; and find amicable solution on challenges,” said Mkhize.

He said his department has undertaken an initiative to support municipalities through a “simplified revenue project”, which is aimed at enhancing the municipal revenue management and debt collection system.

On the debt owned by municipalities to Eskom and water boards, Mkhize said the inter-ministerial task-team dealing with the issue recommended the installation of electricity and water pre-paid metering infrastructure.

“This will be one of the effective tools to eliminate the municipal debt, as the municipal service will be on a pre-payment system nationwide. Organs of state are urged to prioritise municipal services in their budgets. There is a process underway to request the National Treasury team responsible for monitoring provincial and national budgets to ensure that municipal services are prioritised in municipal budgets,” said Mkhize.

Responding to another question, Mkhize said government interventions and support have led to improvements at some distressed municipalities in the country.

In 2018, the government identified 87 dysfunctional municipalities that required urgent support. Subsequently, district support teams comprising more than 80 engineers and town planners in 55 out of the 87 identified dysfunctional municipalities were deployed.

“These 55 municipalities were targeted for technical support due to severe challenges in relation to the delivery of municipal infrastructure for basic services … There are some distressed municipalities that have improved and which, in our view, deserve to be removed from the list of 55 dysfunctional municipalities. A total of 24 municipalities have significantly improved in terms of performance since deployment of district support teams,” said Mkhize.

Most of the municipalities are in the Eastern Cape and KwaZulu-Natal.

phakathib@businesslive.co.za