eThekwini battling to reduce R34b consumer debt
The Department of Education and the Ingonyama Trust are among the entities that owe the eThekwini Municipality a huge debt in unpaid municipal bills.
THE eThekwini Municipality is battling to get to grips with rising multibillion-rand consumer debt which is threatening to cripple the City’s debt recovery plans and municipal coffers.
The eThekwini Council was recently informed that the debt has grown by an average of 3% per month, reaching a total of R34.64 billion by September 30. In the report to Council on municipal debt for the first quarter, the City stated that “This increase is primarily attributed to backdated charges, including the 6kl water back charge.”
According to the report, “Several factors have contributed to the rise in debt, including the ongoing economic downturn, high unemployment rates and tariff increases, as well as issues related to service delivery and billing inaccuracies. Government departments and state entities continue to account for a significant portion of arrears, with major debts owed by the Department of Education and the Ingonyama Trust.”
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The City did, however, report an improvement in revenue debt collection. “The City’s revenue collection exceeded expectations, with R10.6 billion collected – surpassing the 95% target and achieving a collection rate of 99%,” confirmed the report.
The report further outlined the municipality’s strategies for addressing the growing debt. These include the implementation of a Debt Reduction Strategy that focuses on high-value debtors, deceased estates and agreements with schools and government departments. The strategy aims to reduce arrears and enhance overall debt recovery efforts.
“Water debt comprises 39% of the total municipal debt, followed by property rates at 26% and electricity at 14%. Notably, residential debt accounts for 72% of the total debt, reflecting the financial challenges faced by many households,” said the City.
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