eThekwini faces R35bn consumer debt crisis

IOL News

24-04-2025

This restrictive measure unfairly targets paying customers, while ignoring the root cause of the water supply issue water loss has been highlighted as a contributing factor in Consumer debt in eThekwini
A RECENT report detailing the state of consumer debt in the eThekwini Municipality has sparked concerns that ratepayers are deeply overstretched and unable to pay their municipal bills– and could fall even further behind with the new tariffs coming into effect in July.
The report from the finance committee for this month shows that consumer debt in the city now stands at a staggering R35 billion, with a large portion of this debt being more than
30 days old. It added that the debtors'book grew significantly by R7.9bn compared to January 2024.
Household debt makes up the bulk of the debt at R26bn, contributing to 75% of the total debtors. 'This reflects a growing number of households struggling to pay their municipal bills,' said the report. Commercial debt, which includes business accounts, amounts to R6.7bn.
The municipal debt has continued to skyrocket despite interventions made, including offering indebted customers the opportunity to participate in debt relief programmes.
The rising debt has raised concerns among ratepayers and councillors in
the city.
Action SA councillor Zwakele Mncwango expressed serious concerns regarding the municipality's financial situation.
'The picture has been like this for a while – since last year, the debt has been growing, and that is pointing to a serious problem. The main issue here is that the city identifies the problem but then does nothing to fix it.
'For instance, they say that people cannot afford to pay, but nothing is done to create a stable economic environment. More tariffs are being passed that burden those who already cannot afford to pay.'
Mncwango suggested that those in debt could be offered a deal to pay at least half of what they owed, rather than the council losing everything. 'Going after those people legally is also
an expensive process with no guarantee that they will pay in the end.'
DA councillor Mxolisi Khubisa said at R35bn, the size of the debt posed a serious challenge, and the city leadership must take responsibility for it.
'One of the most alarming statistics highlighted is the city's water loss rate, which is significantly above the acceptable rate of 15-30%, currently sitting at 57.82%. The DA is demanding that the city manager be held accountable for these massive losses, which ultimately burden ratepayers.
'The DA calls on eThekwini's leadership to take urgent action to rectify these issues. The city must focus on addressing its billing problems, reducing water losses and ensuring fair and transparent tariff structures. Moreover, a thorough audit of the city's spending and a reduction of wasteful expenditures are essential to restore public confidence and support service delivery improvements,' Khubisa said.
Ish Prahladh, president of the eThekwini Ratepayers and Residents Association, said on Tuesday they had attended a meeting to discuss tariffs and that residents are struggling.
'This (new tariffs) is going to cripple the ratepayers and residents' businesses, especially considering we have a 35% unemployment rate. There are many other avenues to bring in money. We should start with a 5% deposit instead of a 36-month repayment plan; consider extending it to 60 months.
'Additionally, all non-productive buildings should be sold, and Moses Mabhida Stadium should be utilised for other sporting activities without requiring millions in renovations when
it is essentially a white elephant.'
Mayoral spokesperson Mluleki Mntungwa acknowledged that the outstanding escalating debt and the high rate of non-revenue water are key concerns. He said the City had already
initiated targeted interventions to collect outstanding amounts and invest in water infrastructure.
Mntungwa outlined the interventions being implemented to collect outstanding amounts, which include:
*Implementation of the high bill strategy.
*Implementation of the meter- reading strategy.
*Implementation of the debt reduction strategy.
*Review of management of the indigent policy.
* Improvement of indigent management processes.
* Utilisation of external debt col-lectors
* Implementation of the credit control and debt collection policy (including disconnection of services for non-payment).
*Introduction of special debt relief programmes to assist debtors in financial distress and encourage those who can afford to pay.
Mntungwa addressed the issue of tariff increases, saying they were subject to rigorous public consultation and National Treasury guidelines, while bulk tariff increases were imposed on municipalities.
'These increases are necessary for maintaining and expanding critical infrastructure in the face of rising costs and urban expansion. Tariff structures, as part of the trading services reforms, will be reviewed to ensure that they are cost reflective,' Mntungwa said.
THE MERCURY