Debt owed to Eastern Cape municipalities increased 45% in a year

Eastern Cape municipalities are owed a staggering R7.78-billion‚ severely impacting their ability to deliver services. 

This is according to the Democratic Alliance in the province‚ which said in a statement on Tuesday morning that the debt — owed by consumers‚ including government departments — had increased 45% between December 2014 and December 2015.

Government departments owe R392-million‚ said MPL Bobby Stevenson‚ following the release of the quarterly report on the state of municipal budgets.

“Red lights are now flashing for municipalities‚” said Stevenson. “The situation can only worsen this year as consumers battle with rising interest rates‚ inflation and unemployment.”

He said it was vital that the province “got its economy moving again” by creating jobs.

“This is the only long-term solution to creating financially viable municipalities‚” he said.

Stevenson also raised concern about the amount of money owed by municipalities.

“R1.4-billion is owed to various suppliers by municipalities‚ compared to R830-million in 2014. Of this‚ R369-million is owed for bulk services‚ such as water and electricity‚” he said.

“Municipalities are thus retaliating unlawfully‚ punishing creditors by not paying them within the prescribed 30-day period‚ in contravention of the Municipal Finance Management Act. This state of affairs is unfair to small businesses that cannot be expected to bankroll municipalities’ cash flow problems.” – Tiso Black Star Group Digital/Sunday Times