R7bn debt owed to City of Cape Town impacts on services

Cape Town – The City of Cape Town is owed more than R7billion as at the end of December last year by individual and business ratepayers.

The bulk of the outstanding debt is divided between residential properties (R5.561bn) followed by business properties ( R1.518bn), with other outstanding debt amounting to R833m.

The City also said that the total amount of arrears, as of December 31, stood at R5.554bn.

Mayco member for finance and deputy mayor Ian Neilson said: “Debt management actions are being intensified especially against those who can pay but choose not to pay as well as against the frequent defaulters.

“When the debtors don’t respond to the City’s actions taken, the accounts are handed over to the City’s panel of attorneys to proceed with legal actions and then to a sale in execution. Most debtors respond with payments or make an arrangement to pay off the debts when the water supplies have been restricted and/or the electricity supplies have been disconnected or arrears were collected via the electricity prepaid purchases or when they receive summons from the attorneys.”

Neilson said that the debt has an impact on the City’s financial standing. “Due to this debt, the City has to make a provision for bad debt in its budget, which means that fewer services are delivered. If those who have the means to pay, refuse to pay for services that they use, it has a large impact on the sustainability of the City and it impacts on our desire to make this great City even greater,” he said.

In December, 10797 letters of demand were sent out and 516 debtors were listed for adverse credit listing. A total of 8307 electricity prepaid and daily charge collection letters were delivered and 139 accounts were sent for prepaid electricity purchase collections. The total debt outstanding for staff including permanent and temporary employees is at R7373044.

A number of provincial and national departments also owe the City millions. The national Public Works Department has the most debt with R78223 992 and the provincial department R148913880. The City’s public housing rentals and rental properties are also in debt. As of December R619m was owed to the City from housing rentals, for which the City has sent 492 letters of demands and 170 summonses.

There have been 46 evictions for debt of R3.6m. Stop Coct founder Sandra Dickson said: “Due to the City writing off large amounts of this debt, the amount owed to the City is now substantially less and the debt collection ratio about 98%. It is alarming that a government organisation such as the municipality of Cape Town is prepared to go as far as a sale of execution of a residents’ property to recover outstanding debt. The City is governed by the Municipal Act which has no protection for residents to fight such extreme recovery actions. Debt rescue and the National Credit Act is not applicable to such extreme debt recovery actions by a municipality.”