Debt collectors are coming for you - Msunduzi Municipality owed R4bn

2020-01-24 15:14
Pietermaritzburg City Hall. (Jonathan Burton)

Pietermaritzburg City Hall. (Jonathan Burton)

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Almost R4bn. That’s what residents owe Msunduzi Municipality.

Now the council has announced it’s taking an aggressive approach to rein in its runaway debtors book by appointing a posse of debt collectors to go after defaulting customers.

On Thursday, acting city manager Neli­siwe Ngcobo told council that 24 debt collectors had been appointed to a panel to help the city recover its money for rates and services rendered.

She was responding to calls by councillors for the administration to invest more resources into addressing the high debtors book.

Financial instability

They blamed poor revenue collection for Msunduzi’s financial instability, which had also resulted in unsatisfactory service delivery to its residents.

The city’s debtors book has been gradually increasing over the past two financial years and the biggest defaulters were households, which owed more than R2.9bn at the end of December. Businesses made up 14% of the total debt, which amounted to over R575.2m, while the organs of the state, which include government departments and entities, owed Msunduzi almost R180m.

Councillors also called for Msunduzi to put more effort into registering people who qualify as indigents to ensure that the debtors book was credible.

They expressed their disappointment that the indigent register sat at fewer than 5 000 beneficiaries when there were more than 30 000 a few years ago, which helped the city get a substantial equitable share grant from National Treasury for free basic services provided to deserving households.

67 000 customers in debt valued of R1.8bn

Municipal spokesperson Ntobeko Ngcobo told The Witness over 67 000 customers, whose debt was valued of R1.8bn, were part of the initial hand-over to the collection panel.

She said they were dealing with all the debtors with arrears of more than 120 days. Once someone’s account was handed over to the panel, she said they were afforded an opportunity to settle the debt or enter into a payment arrangement.

“Failing to do so will result in legal action being taken to recover the arrears debt. This includes attachments and execution of their property.”

The city will also cut off their water and electricity while the legal action against property owners is pending.

“Debtors are encouraged to settle their debt or enter into payment arrangements before legal processes are instituted,” she said.

The opposition parties called for Msunduzi to implement debt collection strategies equitably across the city.

'Illegally enjoying services'

They said those who were “illegally” enjoying services for free must be billed according to consumption and also disconnected if they failed to pay.

Last month The Witness reported that one of the “problematic” areas for Msunduzi was Vulidlela, where consumers pay a flat rate of R130 for water. Vulindlela has pre-paid electricity meters.

In the six months between May and October last year, the city billed its Vulindlela residents R17.7m but only managed to collect two percent of that, amounting to just R433 000.

City services for nothing

Some of the city's residents neither have water meters nor remember the last time they bought prepaid electricity vouchers, but they continue to enjoy municipal services.

On Tuesday, acting chief financial officer Dudu Ndlovu-Gambu warned the executive and financial services portfolio committees about Msunduzi’s failure to collect all the money it had billed customers for, saying it is holding the city back from reaching its true potential, not only in terms of the quality of service delivery but also in attracting investors.

She said the municipality had great revenue enhancement strategies, but there was nothing to show for them as they were never properly implemented.

As a result the municipality could not even increase its budget and often had to adjust it down because the past performance on revenue collection showed poor results.

Ndlovu-Gambu was confident that the recently appointed panel would make a huge difference.

She said in just a few days in December they managed to collect R19m of the arrears debt.

“If we were to go full force on the strategies we have and install meters in areas that are not metered, then surely we can look at Msunduzi as a capital city because right now the R5.6bn budget does not make sense for such a big municipality which has 39 wards,” Ndlovu-Gambu said.

Read more on:    pietermaritzburg  |  service delivery

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