Cash-strapped Eastern Cape municipalities are owed a whopping R7.7-billion for rates and services, with Bhisho responsible for R392-million of the debt.
But the largest chunk is owed by households, which account for R4.7-billion, while businesses owe a combined R1.9-billion. R727-million is owed by other unnamed debtors.
This was revealed in a provincial treasury report tabled before the Bhisho legislature’s finance portfolio committee meeting.
The report only reflects debt owed up to December 2015.
The legislature’s finance portfolio committee chairman Xolile Nqatha could not be reached for comment as he is on an official visit abroad.
But UDM MPL and standing committee on public accounts (Scopa) chairman Max Mhlathi yesterday said it was unacceptable for government departments to dishonour their debts to municipalities, as it crippled their operations and made them unviable. The debt was also as a result of municipalities’ poor billing systems, he added.
Finance portfolio committee member and DA MPL Bobby Stevenson said: “The situation can only worsen this year as consumers battle with rising interest rates, inflation and unemployment. We need to get our economy moving again and create jobs so the revenue base grows. This is the only long-term solution.”
“The non-payment of municipal services and the increase in amounts owed to municipalities pose serious threats to the financial viability and sustainability of municipalities,” reads the report. “Revenue raising abilities are affected, thus crippling and putting a serious strain on the ability to deliver services to the communities, as well as their financial independence.”
It further reveals that the debt owed to municipalities has become “a standing item” on the agenda of various inter-governmental forums in the province, including the premier’s coordinating forum, MuniMEC, and provincial and municipal CFO forums.
Of the R7.7-billion, R5.5-billion or 71.2% exceeds 90 days.
For the period exceeding 90 days, households owe R3.5-billion or 46% and businesses R1-billion or 13.1%.
The huge debt to municipalities is as a result of “irrecoverable amounts that many municipalities are struggling to collect”, it says. “However certain municipalities have appointed service providers to assist in collecting this long-outstanding debt, despite the socioeconomic challenges faced by the consumers and the entire country.”
Provincial treasury, in collaboration with cooperative governance and traditional affairs (Cogta), are closely monitoring the debt owed by state departments on a monthly basis, and providing support in regular payments.
“Visits to individual municipalities are also undertaken with owing departments to do reconciliation and resolve disputes,” the report continues.
However it does not give a breakdown of which departments owe which municipalities.
Cogta spokesman Mamnkeli Ngam yesterday said the debt was “crippling” cash-strapped municipalities.
“Their revenue base diminishes and as a result they are unable to service their own debts. Because of these unpaid debts, their financial standing is affected, hence the MEC , has since encouraged these municipalities to develop revenue generating strategies,” Ngam said.
On the flipside, it was revealed that in the period ending December 2015, provincial municipalities were indebted to service providers to the tune of R1.4-billion, including R369-million for bulk services such as water and electricity.
Speaking about this debt owed by municipalities, Stevenson said: “This is particularly unfair to small businesses, which cannot be expected to bankroll municipalities’ cash-flow problems.
“Failure to pay timeously causes businesses to fail and further drives up the unemployment rate.”
The report states that the indebtedness is an increase of R582-million from the same period in 2014 and this was attributed to Eskom’s annual price increase and an increase in water prices.
“Certain municipalities have entered into agreements with Eskom ... some still default,” it says.
Three months ago the Daily Dispatch reported that four municipalities faced blackouts as a result of their debt.
The treasury report reveals that R40-million had since been “devoted” from Premier Phumulo Masualle's office and “reallocated” to Cogta to provide support to the four municipalities – Nxuba, Ikwezi, Gariep and Maletswai – to service their long-standing Eskom debt.
Eastern Cape councils are owed R7.7bn
But the largest chunk is owed by households, which account for R4.7-billion, while businesses owe a combined R1.9-billion. R727-million is owed by other unnamed debtors.
This was revealed in a provincial treasury report tabled before the Bhisho legislature’s finance portfolio committee meeting.
The report only reflects debt owed up to December 2015.
The legislature’s finance portfolio committee chairman Xolile Nqatha could not be reached for comment as he is on an official visit abroad.
But UDM MPL and standing committee on public accounts (Scopa) chairman Max Mhlathi yesterday said it was unacceptable for government departments to dishonour their debts to municipalities, as it crippled their operations and made them unviable. The debt was also as a result of municipalities’ poor billing systems, he added.
Finance portfolio committee member and DA MPL Bobby Stevenson said: “The situation can only worsen this year as consumers battle with rising interest rates, inflation and unemployment. We need to get our economy moving again and create jobs so the revenue base grows. This is the only long-term solution.”
“The non-payment of municipal services and the increase in amounts owed to municipalities pose serious threats to the financial viability and sustainability of municipalities,” reads the report. “Revenue raising abilities are affected, thus crippling and putting a serious strain on the ability to deliver services to the communities, as well as their financial independence.”
It further reveals that the debt owed to municipalities has become “a standing item” on the agenda of various inter-governmental forums in the province, including the premier’s coordinating forum, MuniMEC, and provincial and municipal CFO forums.
Of the R7.7-billion, R5.5-billion or 71.2% exceeds 90 days.
For the period exceeding 90 days, households owe R3.5-billion or 46% and businesses R1-billion or 13.1%.
The huge debt to municipalities is as a result of “irrecoverable amounts that many municipalities are struggling to collect”, it says. “However certain municipalities have appointed service providers to assist in collecting this long-outstanding debt, despite the socioeconomic challenges faced by the consumers and the entire country.”
Provincial treasury, in collaboration with cooperative governance and traditional affairs (Cogta), are closely monitoring the debt owed by state departments on a monthly basis, and providing support in regular payments.
“Visits to individual municipalities are also undertaken with owing departments to do reconciliation and resolve disputes,” the report continues.
However it does not give a breakdown of which departments owe which municipalities.
Cogta spokesman Mamnkeli Ngam yesterday said the debt was “crippling” cash-strapped municipalities.
“Their revenue base diminishes and as a result they are unable to service their own debts. Because of these unpaid debts, their financial standing is affected, hence the MEC , has since encouraged these municipalities to develop revenue generating strategies,” Ngam said.
On the flipside, it was revealed that in the period ending December 2015, provincial municipalities were indebted to service providers to the tune of R1.4-billion, including R369-million for bulk services such as water and electricity.
Speaking about this debt owed by municipalities, Stevenson said: “This is particularly unfair to small businesses, which cannot be expected to bankroll municipalities’ cash-flow problems.
“Failure to pay timeously causes businesses to fail and further drives up the unemployment rate.”
The report states that the indebtedness is an increase of R582-million from the same period in 2014 and this was attributed to Eskom’s annual price increase and an increase in water prices.
“Certain municipalities have entered into agreements with Eskom ... some still default,” it says.
Three months ago the Daily Dispatch reported that four municipalities faced blackouts as a result of their debt.
The treasury report reveals that R40-million had since been “devoted” from Premier Phumulo Masualle's office and “reallocated” to Cogta to provide support to the four municipalities – Nxuba, Ikwezi, Gariep and Maletswai – to service their long-standing Eskom debt.
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending Now
Latest Videos