Durban residents are battling to keep up with their municipal bills, with the latest report on eThekwini Municipality consumer debt showing that it had ballooned by more than R1 billion in just one month.
A report on the debtors’ analysis shows that the municipal debt has grown from R25bn in June to R26.5bn in July, representing an increase of R1.5bn in consumer debt in just one month.
For the total debt, the biggest defaults are in water, contributing 36%, followed by property rates at 27% and electricity at 16%.
“The total debt outstanding of R26bn represents an increase of R6.3bn compared with July 2022. Council has adopted a short-term debt collection strategy that includes, among others, targeted collection by a customer group,” read the report. The bulk of the debt was related to household debt, which is R18bn of the total debt.
Commercial accounts that include businesses account for R6bn of the debt.
The total debt amount includes R4.8bn described as “collection challenges” that will take a longer period to recover.
Among the areas under “collection challenges” listed in the report are:
- R1.1bn in rural water;
- R1bn from bus company Tansnat;
- R726 million from credit authorities;
- R278m from the Ingonyama Trust.
The total government debt equates to R1.1bn, “the bulk of the debt amounting to about R878 million is owed by the provincial government and R66m by the national government.
“Targeted one-on-one engagements have been arranged with the government departments owing, and these engagements are ongoing,” the report said.
Parastatals owed the City R300m including Transnet which owed R179m, the Passenger Rail Agency of South Africa R44m and Dube Tradeport R33m, the report showed.
City councillors said the rising debt was concerning and could negatively affect service delivery.
ActionSA’s Alan Beesley said they were extremely concerned by the rapidly increasing consumer debt.
“This ballooning debt is not sustainable and will shortly affect the financial resources of the City. This, in turn, will adversely affect the service levels experienced by residents and businesses, which are currently at an all-time low.
“It highlights that the residents and businesses are under huge financial pressure, and as such it is bizarre that the ANC-led municipality would pass tariff increases way above inflation that further increase these pressures.”
IFP councillor Mdu Nkosi said the IFP had consistently called on the municipality to collect what is owed.
“The money owed is almost the equivalent of a municipality’s operational budget. We have said that if we collected the money, there would be no need for the loans that we keep taking.”
Municipal spokesperson Gugu Sisilana said July 2023 was the first month of the new financial year and billed annual rates amounted to R800m, which were only payable by the end of October.
She said this meant that the debt would remain high until the customers who paid their rates once at the end of the year, as per their arrangement with the municipality so that their services are not disconnected, paid them. This would reflect in October. “There is a general increase that is due to the fact that council is collecting on average 93% to 95% of its monthly billings.”
She said this was being addressed by the council, which was doing the following:
- Disconnection of long-overdue debtors;
- Signing payment plans with debtors to spread the repayment period of the old debt from six to 36 months;
- Utilisation of external debt collectors to assist in this regard;
- Implementation of the credit control policy;
- Engaging with government departments and state-owned entities to discuss their debts and payment plans;
- Identifying major debtors and discussing payment plans with them.
She said disconnections were implemented as a last resort, should the debtor fail to come forward and make arrangements to pay off their outstanding debt in terms of the municipality’s credit control and debt collection policy.
“As a caring city, eThekwini Municipality has a debt relief programme whereby residents and/or customers are encouraged to come forward and make arrangements to pay off their outstanding debt,” Sisilana said.