Broke Eastern Cape municipality writes off R1.2bn debt owed by residents, businesses

accreditation
0:00
play article
Subscribers can listen to this article
The cash-strapped Amathole District Municipality in the Eastern Cape has written off R1.2 billion in irrecoverable debt owed to the council by businesses and the public.
The cash-strapped Amathole District Municipality in the Eastern Cape has written off R1.2 billion in irrecoverable debt owed to the council by businesses and the public.
  • The Amathole District Municipality has written off R1.2 billion worth of bad debts.
  • It announced that despite embarking on vigorous debt collecting initiatives, its customers would not pay. 
  • It said the debt had been escalated by poor customers who failed to apply for indigent subsidies.

The cash-strapped Amathole District Municipality in the Eastern Cape has written off R1.2 billion in irrecoverable debt owed to the council by businesses and the public for municipal services such as water and electricity.  

The municipality announced in a statement that the council had approved the move during an meeting held at the Calgary Conference Centre outside East London on 29 April. 

The approval is in line with the municipality’s credit control and debt collection policy which gives it authority to write off debt regarded as irrecoverable. 

The R 1 218 421 238 debt is divided across nine categories:

• Domestic – R 785 206 322 

• Liquidated Businesses - R 67 062 684 

• Indigent - R 117 127 332 

• Inactive - R 13 835 171 

• RDP - R 57 977 395 

• Estate Lates - R 173 378 819 

• Farms – R 746 830 

• NGO/NPO – R 1 828 692

The municipality revealed that it was unable to recover the debt despite conducting vigorous debt collecting initiatives.

The municipality said that, in addition to these challenges, there was also "constant" theft and misuse of water by residents. 

READ Broke Eastern Cape municipality's R1.5m mayoral advisor post sparks cronyism allegations

The municipality was implementing measures to reduce illegal connections and and other abuses of the system, said spokesperson Nonceba Madikizela-Vuso. 

Madikizela-Vuso said a factor adding to the debt was poor domestic consumers who failed to apply for an indigent subsidy and therefore ended up being billed for services they could not afford.

The irrecoverable debt will worsen the financial problems of the municipality which is already getting support from the provincial and national government so it can get back on its feet.

ALSO READ These are the govt departments and state organs owing the broke Amathole municipality R34m

At the beginning of 2021, it needed a R180-million government bailout to pay four months' salary to its bloated 1 670-strong workforce. 

Municipal manager Thandekile Mnyimba previously revealed that an unaffordable salary bill had caused its financial crisis. He said 900 people were hired in positions not "within its organogram".  

Of the 900 people employed outside of the organogram, the municipality said that 500 were hired in a single month in 2013, in what it termed "mass employment".


Never miss a story. Choose from our range of newsletters to get the news you want delivered straight to your inbox. 

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
15.57
+1.0%
Rand - Pound
19.66
+0.2%
Rand - Euro
16.71
+0.1%
Rand - Aus dollar
11.15
+0.1%
Rand - Yen
0.12
+0.2%
Gold
1,853.66
0.0%
Silver
22.12
0.0%
Palladium
2,076.50
0.0%
Platinum
956.50
0.0%
Brent Crude
119.43
+1.7%
Top 40
63,883
+1.4%
All Share
70,486
+1.4%
Resource 10
76,948
+0.6%
Industrial 25
76,115
+1.3%
Financial 15
16,257
+2.5%
All JSE data delayed by at least 15 minutes Iress logo
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE