City of Jo'burg denies a R13bn debt

The City of Johannesburg on Thursday denied it was R13-billion in debt after reports of a possible liquidity crisis.

Outstanding balances related to rates and taxes amounted to about R5.3-billion by September 30 this year, city spokesperson Kgamanyane Stan Maphologela said in a statement.

“The cash position of the city has improved significantly in the first quarter of the current financial year. This can be attributed to improved levels in the collection of revenue.”

On Wednesday, the Democratic Alliance said the city was running out of money because it was not collecting enough revenue.

DA caucus leader Mmusi Maimane called on the city to beef up its revenue department and set up a team to collect the outstanding R13-billion in debt.

“You don’t need to be a rocket scientist to know what R13-billion could do for the city.”

Dysfunctional department
He said this was largely due to a dysfunctional revenue department that could not arrange for meters to be read correctly.

The city denied this and said the number of accurately billed customers has increased significantly.

“Revenue collection has responded to the interventions made in billing and credit management. Back office re-establishment has also resulted in accelerated query resolution,” Maphologela said.

“The city is making inroads in the collection of old debt as indicated by the 102% collection level achieved during [July and September this year].”

The collection average over the last eight years has always been between 91% and 95%.

“There are certain historical areas where collection levels have always been low with the current socio-economic environment and this will always be an issue.”

He said no business that sold services for credit could ever have 100% collection.

“We are currently on the 92% collection levels.”

Public outcry
During January and February 2011, the city embarked on a credit control campaign with the cutting of services but this was put on hold due to a public outcry.

Maphologela said the city established a task team to deal with queries.

The operating hours of main customer service centres were extended to seven days a week and an outbound call centre was set up to deal with outstanding queries.

The city had also sent pre-termination notices to customers and after 14 days services would be cut off as a last resort to collect outstanding debt.

“Given the current circumstances, the City of Johannesburg is bound by legal mandate to collect what is owned,” Maphologela said.—Sapa

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