Ekurhuleni metro’s collection rate came under discussion when the acquisition of external funds was approved during the municipality’s February council meeting.
This meeting was held in Germiston on Thursday.
The items that made it necessary for councillors to speak about the metro’s collection rate involved the approving of the fifth Ekurhuleni Metro Municipality Municipal bond to fund the metro’s 2013/2014 capital infrastructure programme.
This bond is one of the means the metro uses to fund the capital projects in a financial year.
The fifth municipal bond of R785-million that was approved on Thursday was the remaining amount of the originally approved R4-billion Domestic Medium Term Bond Programme registered on the JSE in July 2010.
The documents in the agenda stressed the impact of under-collection of rates and taxes had to borrowing, as well as maximising debt collection from other organs of the state.
An important recommendation on these items was that a 93% collection rate had to be maintained before requesting any further municipal bonds to fund capital infrastructure.
The target of a 93% collection rate was not achieved by the metro. A mid-year collection rate of this financial year that started on July 1, 2013 was between 86% and 88%.
Other recommendations that were approved included the provision of alternative funding models for the metro, provision of plans for a long-term funding strategy, as well as a long-term capital replacement strategy.
It was on these issues that several political parties slammed the metro during discussion.
Ramesh Sheodin, a DA ward councillor of Springs and member of the finance portfolio, said the DA was in favour of capital expenditure but embarking on another loan in the future will have far-reaching implications for paying residents.
He said the provincial treasury had warned the metro’s failure to collect debts would result in the municipality increasing service charges to unacceptable levels. “The culture of non-payment must come to an end or we are hurling towards a disaster and an unsustainable municipality.
“Increasing our provision for bad debts and reducing expenditure to balance our books cannot go on forever without it impacting on service delivery negatively.
“The more we borrow, the more we have to pay back with interest. Where are we going to get the money from, when we cannot presently collect our debts?” questioned Sheodin.
Estelle Visser, also of the DA, said it seemed as if debt collection was not a priority to the metro. She regarded the ANC-run metro’s officials and the finance department as toothless and not being able to stick to their own targets.
Jan Esterhuizen of the IFP and Izak Berg of Independent Ratepayers’ Association also voiced their concerns on the low collection rates. Esterhuizen requested better financial control.
Berg said the metro had to search for alternative funding sources.
