# R7bn debt owed to City of Cape Town impacts on services

- Link: https://dearsouthafrica.co.za/2020/02/19/r7bn-debt-owed-to-city-of-cape-town-impacts-on-services/
- Published: 2020-02-19T14:38:06+02:00
- Author: dearSA

![](https://cdn.dearsouthafrica.co.za/wp-content/uploads/2020/02/20191147/Screenshot-
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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.”