Western Cape consumers owe municipalities R12bn

Debt owed to Western Cape municipalities has decreased slightly but still is alarmingly high at R12 billion.

MEC for Finance David Maynier’s recently released consolidated statements on the financial performance of the province’s municipalities for the second quarter.

According to the report, consumer debt owed to the province’s municipalities stood at R12bn by the end of December, with households accounting for 74.2% of the R8.9bn debt. State organs owed municipalities R81 million.

As much 67% of the debt owed is older than 90 days. This amount also includes historic debt that has accumulated over an extended period of time and factors in interests that accumulates on accounts that are in arrears.

However, the debt level has reduced slightly by 8.9% when compared to the figure from the end of the first quarter, where it stood at R13.2bn.

“A slight improvement in collection rates is also evident and municipalities must continue to strictly implement debt collection and credit control measures to protect the collection of revenue needed to fund services,” read the report.

This comes after municipalities have struggled throughout the pandemic to effectively collect rates from consumers.

The report also highlighted the debt municipalities owed to its creditors, which stood at R5 185m, with debt older than 30 days amounting to R244.7m. The majority of the debt owed by municipalities is for bulk electricity.

By the end of May, the province’s municipalities owned Eskom R1.5 bn, with the arrears standing at R125.6m.

“Municipalities cited various reasons for payments that are owed for more than 30 days. Bespoke support initiatives and engagements are held with municipalities that reported high outstanding creditor balances,” continued the report.

“Provincial Treasury will continue to provide support to municipalities including guidance and support with budget verifications, financial management capacity building training initiatives, as well as facilitating the reduction of government debt owed to municipalities in conjunction with various government departments.”