eThekwini Municipality has proposed drastic changes to its credit control policy that are aimed at recovering debt, boosting its reserves and cushioning the City against customers defaulting.
Among the changes is that government departments must pay a three-month deposit when applying for council services.
Last week the council approved the changes to the credit control and debt collection policy subject to a public participation process.
A report on the changes said the following amendments in the policy are envisaged: “All organs of state should budget to pay a deposit equivalent to at least 3 months estimated municipal service charges, when making application for a municipal service.”
Regarding debt collection, it said residential ratepayers and non-profit organisations may be required to make a down payment of 25% of the total debt negotiated over 24 months.
Business customers may be required to make a down payment of 50% of the total debt negotiated over 24 months.
On the offer of a negotiated payment of debt in full and final settlement, it said when such payment is less than the total outstanding debt, such settlement can only be accepted upon a written confirmation by the chief financial officer (CFO) or an authorised official.
“This may only occur upon receiving and assessing the written representation from the debtor and full affordability assessment conducted,” it said.
The changes also give the CFO powers to make determinations on the debt and the repayment process, including having the final say on the deposits the customers can put down towards their debt.
Some councillors expressed reservations about the changes.
IFP councillor Jonathan Annipen said people were struggling, not just in Durban but globally, to make ends meet.
He said it was cruel to demand that consumers “outlay 25% of their debt as a down payment in order to keep their lights on and water flowing”.
“Furthermore, businesses that are the bedrock of the economy are now expected to pay 50% of their debt if they wish to stay in business,” he said.
“These measures are harsh and unjust – the policy amendment does not speak to the needs of the poor.”
Alan Beesley of ActionSA said the party supported the amendments.
“However, it must be stressed that it is pointless having excellent policies if they are not implemented and if the various categories of debtors are treated differently.
“At the end of February the amount owed by government departments was R825 million, parastatals R314m, councillors R1m, employees R46m.
The majority of these debts are long overdue,” said the ActionSA councillor.
DA councillor Rory Macpherson said what the DA liked about the policy was that it can be used as a “tool to hold senior management and in particular, the City manager, accountable for poor management or non-compliance with the credit and debt control policy”.
He said the positive changes they had identified included that no special treatment would be afforded to staff whose accounts are in arrears and that water flow restrictors must be installed where customers fall into arrears after 60 days. He added that the municipality needs to deal with staff debt.
“The number of staff now in debt at 90 days and over has risen from 2 687 in September 2023 to 3 762 as of February 2024, which is an increase of 40%.
“It was previously pointed out that 199 senior staff and management alone were in arrears. Many of these employees earn R1m a year upwards.”
Mayor Mxolisi Kaunda said there was a need for the amendments to be affected.
“If you allow the CFO to make a determination on how much is required as a deposit (on the debt), it also allows us to consider the economic climate that we are faced with, which sometimes cripples people’s ability to meet their monthly obligations.”
The Mercury