Salga tries two-phased approach to solve crippling municipal debt problem
SA Local Government Association president outlines plans to recoup R165.5bn owed to municipalities
The SA Local Government Association (Salga) plans to put in place a two-phased approach to address consumer debt to municipalities.
As of end-June 2019 municipalities were owed R165.5bn by consumers, up from R143.2bn in the 2018 financial year, Salga president Thembi Nkadimeng told a media briefing on Thursday after the organisation’s national executive committee meeting in Johannesburg.
Nkadimeng said the situation was untenable. Municipalities were constantly being threatened with disconnections by Eskom and the water boards.
In the first phase all municipalities should “urgently and aggressively” enforce credit control management measures. These included disconnecting government properties and businesses with outstanding bills.
The second phase involved conducting a “rigorous analysis of the gross debt and restructure debts to see realistically collectable debts and those that could be written off or be repealed as historically uncollectable”. It also included the installation of prepaid meters.
Salga called on residents, companies and the government to pay all debts owed to municipalities so the councils can settle their debts with Eskom and the water boards.
Municipalities around SA owe Eskom and the various water boards R25bn and R14.9bn respectively.
Salga’s call comes as the national government and the ANC have shifted the focus to supporting the user-pays principle.
Local government, which is at the coalface of service delivery, has struggled to collect the revenue it needs to fund municipal budgets. Municipalities are for the most part revenue-generating entities.
“It is evident that there is a clear link between the ability of a municipality to service its debt, including that to Eskom and water boards, and the inability of a municipality to collect from government, business and households for services delivered,” Nkadimeng said.
Households owe the largest component of debt to SA’s 257 municipalities, accounting for 71.7%, or R118.6bn, she said. The amount for outstanding debtors for government represents 6.2% or R10.3bn of the total outstanding debtors.
Salga CEO Xolile George said only R40bn owed to municipalities is realistically collectable. The total debt started accumulating before 1994, he said.