eThekwini Municipality faces R32 Billion debt crisis amid service delivery challenges

While the eThekwini Municipality struggles to keep up with service delivery challenges, blaming insufficient funding, it sits with a poor record of debt collection amounting to R32 billion. 

This was contained in a Debt Collection Report for the month ended December 2024 by the eThekwini Finance Committee at a full council meeting on Friday. In the report the total debtors as at 31 December 2024 was R32 billion.

An increase by a billion rand compared to October and November 2024. Additionally, bad debt has been on the increase by 2% for the last three years. The debtors book grew significantly by R7,4 billion, when compared to December 2023.

In its report, the municipality highlighted possible reasons why the debt continued to increase including: dissatisfaction with service delivery; natural disasters; the declining state of the economy and rising economy; and the effect of COVID-19 and the national lockdown. They also pinned the blame on political unrest and the looting that took place in eThekwini; internal billing issues, especially on water and the back charge of the six kilolitres of water. 

However, the report stated that the council has developed a short-term and long-term debt collection strategy which includes among others targeted collection by customer group, meetings with key stakeholders such as government, businesses, parastatals and bulk users. 

To assist, the municipality also appointed a panel of debt collectors to curb the escalation of debt. The report stated that external debt collectors started collecting at the beginning of November 2023 and the next three months will be regarded as a learning (on-boarding) curve.

In the report the municipality anticipates that by June 30 2025, more than R12 Billion worth of the debt book will have been allocated to the external debt collectors to chase. 

In the same report, the city said water made up 40% of total debt, while property rates and electricity are 25% and 14% respectively. The remaining debt is made up of other, wastewater, waste management, interest and property rental. Household debt, which mainly includes individual/residential customer accounts remains high at R25.9 Billion - contributing to 73% of the total debtors.

Commercial debt includes business accounts which amount to R7.7 billion; and organs of state include government and parastatals accounts which amount to R1.6 billion.

In terms of collection, the city said challenges included: unaffordability by the customers to pay for services; water and electricity meter reading queries; and high billing charges which results in disputes/queries and delayed payments.

The report stated that the Department of Education's (DoE) outstanding debt is R220.8 million. After protracted engagements with DoE, the Unit finally agreed on the payment plan. The report stated that the DoE has requested the installation of prepaid meters for water and electricity in their schools, but this project cannot get off the ground due to the prepaid meters being out of stock.

The municipality stated that staff and councillors in arrears are subject to all credit control processes including disconnections, redlining with credit bureau and legal processes. Furthermore, staff members in arrears more than 90 days are subject to salary deductions, although this is an effective tool in collecting from staff in arrears, the salary deduction is only limited to 25% of net salary.

The Ingonyama Trust (ITB) total debt is R277 million. 

On Friday the municipality approved its mid-year adjustment budget for the 2024/25 financial year to respond to current service delivery needs, particularly water and sanitation as well as electricity.

Municipal spokesperson Gugu Sislana said the Executive Committee noted the debt collection and debt reduction strategies that are developed by the eThekwini Revenue Management Unit are being implemented on an ongoing basis. They noted that emphasis was being placed on strengthening measures to collect long outstanding debts.

Councillor Yogis Govender, DA Caucus chief whip, said that the municipality's uncollected debt, particularly in water and sanitation, remains a significant challenge. 

“The R2 billion allocated for water and sanitation is nowhere near what is required to address the infrastructure needs and ensure reliable service delivery. The delays in the implementation of smart meters are a further hindrance in our ability to accurately measure and manage water usage,” Govender said. 

zainul.dawood@inl.co.za