Municipalities will have to change their debt-repayment and recovery policies to avoid falling further into the red, says a Business Day report. According to figures released recently by the Department of Co-operative Governance and Traditional Affairs, municipalities owe creditors more than R15.2bn.

Of this, R9.5bn is overdue debt and R5.6bn current debt. However, notes the report, the real danger lies in the more than R100bn that municipalities are owed by various debtors including residents and businesses as well as provincial and national government departments.

While municipalities’ creditors including service providers, businesses and state utilities charge municipalities interest on debt 15 days after an invoice, municipalities are only able to charge interest 30 days after invoicing, meaning their debt grows faster than they are able to recover debt owed to them.

Responding to a question from DA MP Kevin Mileham, Co-operative Governance and Traditional Affairs Minister Des van Rooyen outlined the debt figures for all municipalities. Top debtors included Malutia-Phofung Local Municipality in the Free State (R1.7bn), Emalahleni Local Municipality in Mpumalanga (R1bn), Matjhabeng Local Municipality in Free State (R1.2bn), Ekurhuleni Metropolitan Municipality (R700m) and eThekwini Metropolitan Municipality with R681m.

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