Over the past year R22.3 billion in debt was incurred by municipalities due to a lack of payment by households, government departments and businesses.
The South African Local Government Association (Salga) reported that the rolling debt, since pre-1994, sits at R165.5 billion as at June 30, up from R143.2 last year.
“Of this debt,” Salga’s chief executive Xolile George said at a briefing on Thursday afternoon, “only R40 billion is recoverable.”
Households owe the largest portion, amounting to about 72% of the total debt. Services rendered to government institutions account for about 6.2% of the debt, while the rest is owed by metros and businesses.
This crippling debt has been described by Salga president, Thembi Nkadimeng, as part of the reason why municipalities are failing to make payments to Eskom and water providers.
This follows discussions held at Salga’s national executive committee meeting over the last two days.
She said that the committee noted that discussions in the public have been rife over municipalities owing money to its service providers, “however, a discussion that has not been had is around municipal debt: money owed by general households, government departments and businesses to municipalities, as well as outstanding Eskom and water board debt to municipalities themselves.”
Nkadimeng added that “municipal debt to Eskom and water boards sits at R25 billion and R14.9 billion respectively.”
Salga said that government owes municipalities R10.3 billion most of which is from the national and provincial departments of public works.
She reiterated that if municipalities were paid the money that is owed to them, they would in turn be able to pay their service providers.
Salga has therefore taken the drastic steps of urging municipalities to urgently and aggressively enforce credit control management measures, including targeting government properties and businesses, by cutting them off from services, where there is sufficient merit, in line with their credit control policies.
The association wants municipalities to conduct a rigorous analysis of the gross debt and to restructure debt to see which of that money can be realistically recovered and which of those debts need to written-off.