South Africa’s households owe their municipalities R133b – Treasury

City of Johannesburg. Image credit: Needpix.com

South Africa’s households owed their respective municipalities a total of R133.9 billion as of 30 June, 2020, according to the National Treasury.

The revelation is contained in Treasury’s local government revenue and expenditure report for the fourth quarter of the 2019/20 financial year released on Thursday.

Municipal consumer debt

Households constitute the largest share – 69.9 percent – of the R191.5 billion in total municipal consumer debts. This is slightly lower than the 70.5 percent or R127.7 billion recorded in the third quarter of 2019/20. Government agencies account for 7.7 percent or R14.8 billion, compared to R18.1 billion reported in the 2019/20 third quarter.

These figures mean that a large number of South Africans are not paying, or are paying late, their property rates, service charges such as water, sanitation, electricity and refuse removal, and other obligations such as traffic fines and rental housing payments.

Treasury said, “It needs to be acknowledged that not all the outstanding debt of R191.5 billion is realistically collectable, as these amounts are inclusive of debt older than 90 days (historic debt that has accumulated over an extended period), interest on arrears and other recoveries.

“If consumer debt is limited to below 90 days, then the actual realistically collectable amount is estimated at R33.4 billion.”

Biggest culprits

The report covers 257 municipalities. Metropolitan municipalities are the worst affected and are owed a total of R103.2 billion. This is up from R88.1 billion reported in the third quarter of 2019/20.

“The largest contributors are the City of Johannesburg which is owed the largest amount at R31.1 billion, followed by City of Ekurhuleni at R16.4 billion, City of Tshwane at R16.2 billion and eThekwini at R13.5 billion,” Treasury said.

Once again, households in metropolitan municipalities are the biggest culprits, as they owe a total of R71.1 billion or 69.5 percent of outstanding debt. Businesses account for R24 billion or 23.5 percent, while government agencies owe R4.5 billion or 4.4 percent.

Secondary cities are owed R35.8 billion, down from R39.9 billion reported in the third quarter of 2019/20. Households still account for the largest share of this debt at R27.5 billion, or 76.8 percent.

Although municipalities are owed huge amounts, Treasury expressed concern that a large number of them “are not budgeting, transacting and reporting directly in or from their core financial systems.”

In overall terms, municipalities spent 79.9 percent, or R384.3 billion, of the total adjusted expenditure budget of R481.2 billion. They also failed to reach their revenue targets, raising 88.8 percent, or R427.5 billion, of the total adjusted revenue budget of R481.4 billion.

Be the first to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.