KZN towns owed R5,2 bln

2008-08-11 00:00

KwaZulu-Natal municipalities are owed more than R5,2 billion in outstanding rates and service charges by their citizens.

This amount was revealed by KZN head of Treasury Sipho Shabalala at a conference on local government financing in Durban yesterday.

Shabalala said that while non-payment is an issue, a bigger problem is the inadequate debt collection systems within municipalities and an unnecessary reliance on debt collection companies.

“We are doing an analysis of these debt collection companies and find that they are more of a hindrance than assistance to municipalities.

“These companies retain 15 to 30% of the amount they collect. We say, therefore, use debt recovery agents with caution,” he said.

He conceded that state departments owe vast amounts to municipalities. Msunduzi Municipality is owed more than R100 million by the government, and according to a Durban newspaper, eThekwini Municipality is owed R400 million.

Shabalala added that the provincial treasury could intervene on behalf of municipalities to recover these amounts.

He pointed out that much of the debt was historical and he asked how it had been allowed to accrue to such large amounts.

“If you have not been treating them [government departments] as ordinary clients, maybe that is the problem. If ordinary clients don’t pay, you don’t let six years go by and then start demanding payment,” he told the delegates.

Shabalala added that another problem is that municipalities have not sent the necessary bills to government departments.

The KZN head of Treasury was the keynote speaker at the start of a two-day conference organised by the Democracy Development Programme and the School of Public Administration at the University of KwaZulu-Natal.

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