District council owed almost R1?bln

2010-03-16 00:00

DEBTORS owe the uMgungundlovu District Municipality (UMDM) almost a billion rand for services rendered, and more than half of that amount is likely to be written off as it may be irrecoverable.

This information came to the fore last week, when Finance MEC Ina Cronjé delivered her municipal budget review speech for the first quarter of the current financial year.

In her speech, Cronje said “[five] districts have debt [owed] exceeding R300 million each, and uMgungundlovu [is owed a total of] R869,2 million”.

Cronjé cited the financial downturn, outdated registers or the absence of indigent registers, late and improper billing of consumers, inefficient enforcement or poor formulation of the credit control policy, and ineffective payment processes as the main reasons for high levels of debt.

“The debt of the over-90-days category may be irrecoverable, and consequently may have to be written off. This reduces the liquidity … and funds for service delivery become even scarcer,” she said.

This means that the UMDM may have to write off more than R500 million, which represents almost 60% of the R869,2 million owed.

Municipal manager S’bu Khuzwayo said the outstanding debt due to them covered the district as a whole.

“It includes R500 million from Msunduzi [Municipality], our R100 million and pockets from other municipalities,” he said.

The UMDM’s chief financial officer, Busani Ndlovu, said the figure reflected in the MEC’s speech summed up the entire amount debtors owed to the district, as well as the seven other local municipalities falling under its jurisdiction.

He said the bulk of the amount, which represents approximately 70%, emanated from those who owed the Msunduzi Municipality. UMDM came in second place, uMngeni Municipality came in third, while the rest came from the smaller municipalities, he said.

“It’s worrying, and this is a threat faced by municipalities country-wide,” he said.

Ndlovu said he agreed with Cronjé when she said the outstanding debt will affect service delivery, and government departments are the biggest culprits.

Businesses are also problema­tic, said Ndlovu, and the municipality is looking at ways in which to recover money owed.

Ndlovu said writing off debt was a reality, as many of the smaller municipalities falling under the district were mostly made up of indigent residents who simply cannot afford to pay.

He said the municipality had already reported government defaulters to provincial Treasury so that it can assist them in recovering what is due.

“Businesses will definitely be handed over to debt collectors because they can afford to pay.”

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