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While noting that the responsibility for recovering debt owed to municipalities falls on the municipalities themselves, Cooperative Governance and Traditional Affairs Minister Pravin Gordhan says national government’s ‘Back to Basics’ campaign, which gives specific focus to the improvement of municipal financial management practices, institutional arrangements and customer service, will assist municipalities in recovering the R94-billion still owed to them by households and businesses.
“The fact that debt collection is a legal process that needs to be followed as prescribed means that the department cannot collect on behalf of the municipalities.
“Within government’s [Back to Basics campaign, however,] specific effort is made to improve debt collection in municipalities through the review and improvement of the entire financial management system of municipalities, which includes the revenue cycle,” he stated in a written parliamentary response to Congress of the People MP Mosiuoa Lekota.
The campaign would also involve the review and improvement of municipal billing systems to ensure credible invoicing, the review and improvement of the metering systems of municipalities and a customer-focused query resolution process to expedite payments.
The Department of Cooperative Governance and Traditional Affairs, in collaboration with National Treasury, had also actively embarked on initiatives to support the ability of the municipalities to collect the debt, Gordhan added.
In facilitating compliance with the legal framework, the department had continuously assessed the municipal credit control and debt-collection policies for credibility.
This process entailed the identification of gaps that resulted in nonpayment, the inability to enforce the policy and implementation impediments.
“Municipalities are given feedback on areas that require a review of their policies and, where necessary, continuous monitoring of implementation of such policies,” Gordhan outlined.
The department was also facilitating debt management measures in collaboration with Treasury to prevent debt accumulation and improve the management of indigent households.
According to Gordhan, a targeted approach had, meanwhile, been taken on the collection of municipal staff accounts, councillors and suppliers providing services to municipalities.
“We have also developed a national campaign to encourage citizens to pay for services and settle outstanding debt, which will be undertaken during the 2015/16 financial year.
“The department also leads a task team on the payment of municipal debt by government departments, the main focus of which is to verify the unpaid historical debt for legitimacy to facilitate payment by the responsible departments,” he commented.
Gordhan told Parliament earlier this month that a nationwide study had revealed that one in three South African municipalities was dysfunctional and had shown underperformance in the areas of economic, tax and financial viability, and dependence on intergovernment transfers.
The factors that led to dysfunction included political instability and problems with service delivery and institutional management, Engineering News Online reported.