SA’s struggling municipalities are owed a staggering R19.5bn by other organs of state as provinces fail to keep up to date with increases imposed by the local government sector for services and property taxes.
This was revealed by deputy president David Mabuza in a written response to a question from the IFP.
The matter again threatens to undermine the state’s drive to enforce the user-pay principle and is compromising service delivery. The government has in recent times emphasised the need for South Africans to pay for services amid concerns that many municipalities are neck-deep in debt and facing collapse.
Mabuza said that up to December 2021, municipalities were owed a combined R19.5bn by various organs of state. This is broken down into R8.2bn owed by national departments, R9.2bn owed by provincial state organs, and R2.1bn owed in the category “other” which includes state-owned entities, municipalities owing other municipalities, and in some cases traditional councils owing municipalities.
Many of SA’s 257 municipalities in turn are struggling to service their own mounting debt, notably to cash-strapped state power utility Eskom. Municipalities owe the struggling power utility close to R36bn, an increase of nearly 26% from the financial year ended March 2021.
Municipalities are also owed more than R150bn by residents for services. Some residents have attributed their failure to pay for electricity and other municipal services to high levels of unemployment and poverty.
Mabuza, who is the leader of government business, said provinces are struggling to keep up to date with increases imposed by municipalities for services and property taxes.
“Allocations [from the fiscus] to provincial departments of public works and infrastructure [do not increase] at the same [rate] as municipalities impose for services and property taxes. Municipal increases weigh much higher than the increases in the budget allocations to departments,” Mabuza said.
Furthermore, he said, there are a large number of properties that still have the incorrect naming configuration, meaning that billing gets lost.
“These properties are supposed to be in the name of the department of public works & infrastructure, yet they still appear in the deeds registry as having names such as ‘RSA’, and other names from the old categorisation. As a result of this challenge, municipalities are not billing the correct custodian of the property, due to incorrect names in their municipal books,” Mabuza said.
Another area of concern is that the department of public works & infrastructure, which is tasked with managing the state’s property portfolio, disputes many of the invoices issued by municipalities and questions the credibility of these, the deputy president said.
“The last area relates to properties that have no contractual arrangements in place. Most of these properties belong to the department of public works & infrastructure, yet there are other user departments utilising the premises. In light of no contractual arrangements between the two parties, the bill remains unpaid to the municipality and accumulating arrears.”
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