SA towns struggle to collect $11.1bn debt

South African towns and cities are in increasingly dire financial straits, with a National Treasury report showing they are likely to collect less than a fifth of their outstanding debt.

Consumer debt owed to municipalities rose to R191.5 billion by the end the financial year through June 30, from R181.3 billion in the previous quarter, the Treasury said Thursday in a statement on its website.

If debt older than 90 days is excluded, “the actual realistically collectable amount is estimated at R33.4 billion,” the Treasury said. “This should not be interpreted that the National Treasury by implication suggests that the balance must be written off by municipalities.”

A succession of government reports has shown the mounting risk the 257 municipalities pose to the nation’s finances. Local authorities’ inability to collect payment for rates and services from residents who are unable or unwilling to pay means they struggle to settle their own bills.

Municipalities owed their creditors R60 billion by June 30.

The eight metropolitan municipalities are owed R102.3 billion. The largest components were due to Johannesburg, the adjacent industrial hub of Ekurhuleni and Tshwane, which includes the capital, Pretoria. Households account for almost 70% of this debt.

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