We all owe City R3,5 BILLION

2019-07-11 16:16
City Hallâ??s Clock tower keeps ticking. The Msunduzi municipality has managed to keep ahead of the problem the pigeons keep dropping. Photo. Jonathan Burton8BIM

City Hallâ??s Clock tower keeps ticking. The Msunduzi municipality has managed to keep ahead of the problem the pigeons keep dropping. Photo. Jonathan Burton8BIM (File)

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Msunduzi council has called for urgent action to deal with the City’s runaway debtors’ book, which has risen to more than R3 billion.

Councillors were alarmed when they received a report indicating that the City’s consumer debt sat at close to R3,5 billion at the end of May, as even electricity — which is Msunduzi’s main revenue source — brought in far less than its anticipated earnings.

The municipality recorded a surplus of R205 million for the month of May but there was a warning that the debtors’ book was continuously increasing “which poses a serious threat to the municipality’s future sustainability”.

The report said the municipality must monitor its income and spending closely, or risk using more money than they collect.

If it does not, the City risks having cash flow problems in the long run.

An excess of R2,5 billion is owed by households, about R520 million is owed by businesses, while government departments and entities collectively owe Msunduzi close to R211 million. The municipality is also owed more than R241 million by the rest of its customers.

DA caucus leader Sibongiseni Majola said the figures were shocking and they indicated that the City’s credit control policy was not effectively implemented.

He said the revenue department was obviously not dealing with the challenge of the increasing consumer debt.

The Speaker, Jabu Ngubo, agreed with him, saying council needed to change its approach in dealing with debtors and should not just rely on disconnections.

“There should be aggressive engagements with both Cogta and Treasury in terms of them assisting us to be able to recoup those monies from government departments. Also, we should not be soft on business people because ... those are the people who are making profit out of our services; we should be harsh.”

She said the City’s ongoing campaign to collect long outstanding debt, called Operation Qoq’ imali (We are collecting money), was not as effective as 2010’s Operation Pitbull, where all the defaulters felt the pinch.

“Our collection strategy is not as aggressive as it should be. I remember during the times of Operation Pitbull, even the political leadership would be roped in to accompany the officials to go door-to-door,” said Ngubo.

Administrator Sibusiso Sithole said the municipality needed to seriously assess its collection strategy because this had an impact on its financial viability. He said some of the financial matters related to revenue and expenditure would be dealt with extensively when he workshopped with the council on his turnaround strategy. He said recommendations would be made on how the City could enhance its revenue collection to exceed to the current rate.

Acting municipal manager Nelisiwe Ngcobo conceded that the credit control policy had not been implemented effectively. She said the finance sub-unit that was running Operation Qoq’ imali was under-capacitated and that affected how they carried out the disconnections.

Ngcobo also pleaded with councillors to support the revenue team and not interfere with their work when they disconnected defaulters.

She said it was council’s responsibility to make sure they are collecting the revenue owed to Msunduzi. “It’s a lot of money; it’s going into R4 billion. So when we go on the road to disconnect, let’s get your support and not be criticised internally.”

Ngcobo acknowledged that there was a possibility that some of the households that contributed to the debtors’ book could qualify for free basic services but they had not registered as indigents. She said the municipality would be appointing a team to go out and identify them. “The 5 000 that we have now [on the indigent register] is not enough. We used to sit at more than 20 000 indigent customers, where have they disappeared to?”

She said once registered, some could even qualify for debt write-off.

By not registering all its indigent people, Msunduzi is losing out on the equitable share from National Treasury to which local government is entitled. This revenue is given to municipalities to enable them to provide basic services to poor households, and to help councils with limited resources to afford basic administrative and governance capacity and perform core municipal functions.

Read more on:    pietermaritzburg  |  msunduzi municipality

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