Finance

1. Whether any of the municipalities in the province struggle with revenue collection; if so, what are the relevant details;

Answer:

At 30 June 2014, published in Provincial Gazette Extra-ordinary 7289 dated 30 June 2014, outstanding debt ostensibly owed to municipalities amounted to R8.42 billion.

The depressed economy does not bode well for municipal revenues with major employment challenges specifically amongst the youth and the agricultural sector. To this end, the increased unemployment levels necessitated municipalities to widen its indigent support, due to a rise in poor households, to access free basic services such as water, electricity, refuse and sanitation.

Consequently, a number of municipalities are starting to experience challenges in generating sufficient own revenue to cover all required expenditure items, in the context of dwindling surplus trends and in a few instances, trading deficits in the major trading services (electricity, water, sanitation and refuse).

It should however be noted that all municipalities put in efforts to collect revenue due to them.

Question:

2. Whether his Department has put any measures in place to help municipalities to collect their revenue in order to pay their own debts; if not, why not; if so, what are the relevant details;

Answer:

Support interventions by the Provincial Treasury include amongst others:

• Research on the fiscal transfer system specifically the local government equitable share allocation for district municipalities.
• Guidance on developing appropriate tariffs which are affordable that will ensure that full cost recovery and improved municipal revenues are achieved.
• Development and implementation of Long Term Financial Plans to ensure the long term sustainability of municipalities.
• Development of turnaround plans for financially distressed municipalities to ensure that municipalities remain financially viable.
• Promote the reduction of water and electricity distribution losses.
• Assist with revenue management and expenditure efficiency initiatives.

Question:

3. How much is owed to each municipality by (a) residents, (b) governmental organisations and (c) commercial consumers?

Answer:

As at 30 June 2014, published in Provincial Gazette Extra-ordinary dated 30 July 2014, the total outstanding debtors owed to municipalities as at 30 June 2014 amounts to R8.42 billion of which:

1. Residents owes R6.10 billion (72.45 per cent);
2. Governmental organisations owes R186.72 million (2.22 per cent); and
3. Commercial consumers owe R2.12 billion (25.2 per cent).

The details are reflected in the table below:

 

 

Of the total:

• 24.1% falls within the 0-30 days category;
• 3.2% falls within the 31-60 days category;
• 2.7% falls within the 61-90 days category;
• 6.1% falls within the 91-120 days category, and
• 63.8% falls within over 120 days category.