Latest news with #R6.7bn
IOL News
24-04-2025
- Business
- IOL News
eThekwini faces R35bn consumer debt crisis
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
IOL News
22-04-2025
- Business
- IOL News
Tariff hikes in City's draft budget face backlash from civic groups
Civic associations are pushing back against the City's 2025/2026 Draft Budget due to steep fixed charges, which they say will impose financial strain on middle income homes. The public has until May 2 to comment on the R84.1 billion draft budget, which Mayor Geordin Hill-Lewis tabled in last month's Council meeting. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The infrastructure investments include over R16.5bn for water and sanitation, R5bn for electricity grid upgrades, R3.4bn for roads, and a further R4.5bn for the new MyCiti bus route linking Khayelitsha, Mitchell's Plain and a host of other communities with Wynberg and Claremont. As part of the City's R6.7bn Safety and Security budget, the mayor said over 700 new municipal police officers will be deployed. Hill-Lewis announced major tariff restructuring reforms, which are expected to shield lower income households from financial pressures. In this reform, water and sanitation fixed charges will now be determined by property values rather than connection size; while electricity rates will rise by 2% on average. Residents will also see a City-Wide Cleaning Tariff explicitly reflected on their bills from July alongside refuse removal. According to Hill-Lewis, this is not a new expense as customers previously helped fund this via property rates, and the tariff will be fully buffered by the reduction of electricity costs going to other forms of service delivery. The increases from the tariff restructure have provoked strong opposition from civic associations. Tokai Residents' Association chairperson, Don Kourie, says they are firmly opposed to the tariff restructure, noting that the City's Tariff Calculator shows a potential 20% increase in monthly rates bills for homeowners. 'The new cleaning tariff is unacceptable — it's based on property value, yet the service benefits all residents equally, not individual homes. 'The water connection tariff will also be based on property value. A fixed fee for every property, as there is for refuse collection, rather than a property value-based mechanism, would be more appropriate,' Kourie says, arguing that the current method is inequitable. 'Rates and refuse charges are going up by 7–8%, well above the current 2.8% inflation rate. These new tariffs fail the City's own promise of equity and fairness. Many residents, especially pensioners on fixed incomes, will face an unfair and disproportionate burden.' Keith Barton, Bergvliet Meadowridge Ratepayer's Association chairperson, says the draft budget places the burden on middle- and upper-income households with sharp hikes in fixed charges — all tied to property value. 'If approved, this budget will cause financial strain for many middle-income homes. "A typical R4.2 million property in our suburbs would pay R920 more per month in fixed charges — irrespective of the amount of electricity and water consumed. Households with solar and boreholes using minimal City services could see monthly municipal bills rise by over 30%. 'The City says this new structure ends the past practice of cross-subsidising other municipal services via electricity sales. We do not believe that municipal charges should be so heavily skewed towards a property's value instead of its consumption of services.
