[Opinion] Households owe SA municipalities over R100 billion

Local Government Revenue and Expenditure preliminary results for the period 1 July 2019 to 30 June 2020 reveal that aggregate municipal consumer debts amounted to R191.5 billion. The largest component of this debt is of households owing  municipalities a total of R133.9 billion (69.9% of the total debt owed by all types of customers).

Of the R133,9 billion owed to municipalities by households, a total amount of R115,3 billion is no longer realistically collectable considering that the debt is older than 90 days old and if household debt is limited to below 90 days, then the actual realistically collectable amount is estimated at  R18.5 billion.

Pre-Covid-19, many households skipped paying municipal bills mainly as a result of poverty and unemployment woes. Covid-19  and the resultant lockdown have  led to individual and  business income losses,  leaving many with little or no future prospects, thus making it harder for  ratepayers to settle their municipal bills.

Tawanda Makombo, analyst at the Centre For Risk Analysis (CRA) notes, “Households that skip paying their municipal bills put municipalities on the verge of collapse, posing a threat to basic service delivery. Issues of poverty and unemployment need to be addressed with urgency, or else household debt in many municipalities will spiral out of control owing to default or non-payment.” 

Article by Tawanda Makombo