Consumer debt to municipalities still at R117bn

The debt owed to South African municipalities remained stagnant at R117-billion, with national government owing R2.3-billion and provincial departments owing R2.3-billion, Cooperative Governance and Traditional Affairs Minister Des van Rooyen said on Thursday.

Briefing journalists ahead of tabling his budget vote in Parliament, Van Rooyen said the rest of the debt was owed by households and businesses.

The municipalities finding it difficult to recover debt, mostly historic debt, and remain indebted to Eskom, with much work being done to reduce the debt.

“Municipalities all in all owe Eskom R9.5-billlon, so it tells a story that if we give effect to appropriate credit control measures, I think more municipalities will be better positioned to take care of their creditors,” said Van Rooyen.

“An inter-Ministerial committee is dealing with the issue of money owed to Eskom, but also the capacity of municipalities to pay their creditors,” he said. “In our last meeting, the indication was very clear that we are still on course with municipalities being up to date with their payments.”

The minister warned that while the payment agreements between councils and Eskom, which threatened to cut power supply to indebted municipalities, were on target, it was not sustainable.

He said more work needed to be done in collaboration with municipalities to ensure they generated their own revenue to become self-sustainable so they could pay their creditors.

“We are also trying to see how, financially, we can help municipalities to replace ageing infrastructure which in most of the instances is the cause of the misalignment between what they pay for the services and what they owe for the services they are provided.”

A National Treasury report released in March last year put the municipal debt at R117.9-billion. The report said most of this debt was older than 90 days (historic debt) making it difficult to recover. The report stated that realistically only R22.8-billion was recoverable.