The City will be resuming with its credit control and debt collection processes effective from 1 July 2020 to ensure that it is in a stable financial position in order to continue to provide essential services to eThekwini residents. This follows the tabling of a report during an online Executive Committee meeting held today, 26 May.
These credit control and debt collection measures include the disconnection of services as well as the levying of interest on arrears with effect from 1 July 2020.
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 customers 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 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 arrear 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 the Covid-19 pandemic 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.
The tabled report states that according to the Credit Control and Debt Collection Policy, arrear amounts result in the disconnection of services.
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&Bs and guesthouses who 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 percent 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 and,
• 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 customers were going to struggle with payment of rates and services and assisted customers 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 2020 was never foreseen. EThekwini Municipality has taken pride in its collection rates of 95 percent on 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 the 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.
EThekwini Mayor Councillor Mxolisi Kaunda said: “We need to run a Municipality that can sustain services. We do this by collecting revenue in order to provide service delivery in eThekwini. We will not allow eThekwini to collapse.”
EThekwini Deputy Mayor Councillor 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 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 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 metre readings will be expediated with water readings having already started. Electricity readings will begin next week, he said. Kumar urged customers to also send their metre readings into the City as an alternative.
Peet Duplessis, Head of Revenue Management, said if someone approaches the City who is unable to pay, there is a policy that makes provision for them to have a six-month deferral in order for them to stabilise financially. He said the City also has the Indigent Policy to assist people who meet the requirements.