eThekwini Municipality to resume credit and debt collection

FOLLOWING a collection disruption, eThekwini Municipality will resume its credit control and debt collection processes effective from Wednesday, 1 July, to ensure that it is in a stable financial position to continue to provide essential services to residents.

This follows the tabling of a report during an online executive committee meeting held in late May.

The collection measures include the disconnection of services as well as the levying of interest on arrears. The municipality will look at each case based on its own merit with the collection process focusing on customers who have not been financially affected by the Covid-19 lockdown to pay for their services.

Those who are struggling financially and have been affected will each be reviewed on a case by case basis with processes in place to assist them.

The municipality’s acting head of communications, Mandla Nsele, said the measures in place to assist those who are unable to pay their bills include a deferment of payment for up to six months for customers who meet the criteria as well as the Indigent Policy which assists vulnerable groups and the poorest of the poor.

“The tabled report states that in terms of Section 96 of the Municipal Systems Act 32 of 2000 the municipality is obliged to collect all monies that is due to it. According to the Credit Control and Debt Collection Policy, arrears rates and services may result in disconnection of services.”

“The report states that the financial position of the city has changed drastically as a result of lockdown. The tabled report states that April 2020 was the worse month for the municipality as it was the first full month where there was no business activity,” he said.

He added that council took the decision pre-lockdown not to implement disconnection measures as a form of credit control and that no interest should be charged on accounts that fall into arrears during the lockdown period.

The report outlined support and relief schemes that have been approved for implementation. These include:

• Rates rebate for B and Bs and guesthouses will receive a Covid-19 rebate to bring their rates payable to the same level as residential.
• An incentive to write off interest has also been submitted and under this scheme will allow customers who pay 50 per cent of their debt to receive a once-off write-off of their accumulated interest. The balance of the debt is payable to a maximum period of 24 months interest free.
• All rate renewal applications for senior citizens, disability grantees, child-headed households and medically bordered persons will be renewed automatically.

The report notes that the country finds itself technically in a recession and the impact of the Covid-19 pandemic is putting further constraints on the financial resources of the city and has impacted negatively on the collection processes.

The municipality considered the fact that residents were going to struggle with payment of rates and services and assisted them with relief including the suspension of credit control activities and the disconnection of services along with the suspension of charging of interest on arrears.

The report states that while the collection rate for the months under lockdown was going to decrease, the collection rate of 56 percent for April was never foreseen, a sharp decline from the of 95 per cent average. Further, it has been proven that implementing credit control measures by disconnection of services increases the collection rate because some people that can afford to pay, do pay.

The report stated that the municipality is in a precarious state and cannot continue to operate and provide much-needed services to communities without implementing credit control measures. If the collection of arrears does not improve the municipality will be in serious financial trouble by year-end, it noted.

Mayor Mxolisi Kaunda said: “We need to run a municipality that can sustain services. We do this by collecting revenue to provide service delivery in eThekwini. We will not allow eThekwini to collapse.”

Deputy Mayor, Belinda Scott, said the city has to continue collecting revenue. “If we don’t, we won’t be able to pay for essential services. Also, this directive to resume credit control and debt collection comes from the national government,” she said.

Deputy city Manager of Finance, Krish Kumar, explained the encouragement of these measures is being done throughout the country. He said there are measures in place to assist customers including the city being prepared to write off R1bn for customers willing to pay the accrued debt.

“The city requires income to meet its obligations including providing Covid-19 relief such as food parcels and assisting the homeless. Other metros will also have to undertake these measures if they want to recover,” he said.

He added that metre readings will be expedited with water readings having already started and electricity readings will begin next week. Kumar urged customers to also send their metre readings into the city as an alternative.

Head of Revenue Management, Peet du Plessis, said if someone who is unable to pay approached the city, there is a policy that makes provision for them to have a six-month deferral for them to stabilise financially. He said the city also has the Indigent Policy to assist people who meet the requirements.

Rates relief for B and Bs and guesthouses
A report outlining special rates relief for B and Bs and guesthouses in eThekwini was tabled at an online executive committee meeting.

This was done to ensure their sustainability during lockdown.

The report states that a special adjustment is sought to the 2019/20 annual budget that was approved on 29 May 2019 to provide relief to certain category of owners which have been unable to operate during lockdown.

The report states that upon written application and approval, qualifying owners of rateable immovable property who are engaged in Bed and Breakfasts and guesthouses and have suffered more than a 60 per cent revenue loss, be afforded rates relief in an amount not exceeding 50 percent of the current rates payable on the property.

The rates relief will be effective retrospectively from 1 April 2020 until lockdown levels is relaxed to level three or lower, with the rates relief terminating on the last day of the month immediately following the month in which a lower alert level declaration occurs in terms of the Disaster Management Act 2002.

The application window for the submissions of an application for Covid-19 rates relief for the 2019/20 financial year will be 30 June.

In the case of multiple-use properties, rates relief will apply only to the applicable rates categories allocated to the qualifying uses in question.

Property owners will be required to apply for rates relief on a prescribed form.

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