National departments owe municipalities R4.8bn

National government departments owe municipalities R4.8-billion in unpaid services according to the department of co-operative governance and traditional affairs. 

The figure was revealed on Sunday at a briefing by the state’s governance and administration cluster, which detailed the work being done to improve the government’s record on service delivery. 

According to Tozi Faba, deputy director general at the department of co-operative governance and traditional affairs (CoGTA), national departments owe the countries 278 municipalities about R4.8-billion. 

He could not provide a figure for the amount of money that provincial governments owe local municipalities. 

He said the department had started a campaign to get national departments as well as provinces to institute a culture of payment.

“There is no particular reason that one can give [for not paying] except to say here and there they [departments] are just defaulting and from time to time they will query the amounts,” Faba told journalists. 

He added that the amount had been declining. 

Equitable share
In March this year, the treasury withheld the equitable share of 59 municipalities for unpaid bills due to cash-strapped power company Eskom as well as other state utilities such as water boards. 

The equitable share is a grant made to each municipality from the national fiscus, intended to help provide basic services to the poor and to help municipalities with limited resources fund basic administration and governance costs. 

At the time, municipalities owed R9-billion and water boards R3.6-billion. 

But on Sunday, minister of home affairs, Malusi Gigaba, who led the briefing, said that 54 of the municipalities had now received their full portion of the equitable share. A further three had received part of their equitable share tranche, while two, Renosterberg and Ngwathe municipalities, did not receive any funds. 

Fourty-eight municipalities had also signed agreements with Eskom while 12 out of 14 municipalities had signed an agreement with water boards. 

Gigaba added said that, under the auspices of the President’s Co-ordinating Council, letters had been written to all national departments and provincial treasuries for the debt owed to municipalities. The council is structured whereby the president meets with premiers of the provinces and the South African Local Government Association (Salga).

Drop in the R100-billion ocean
But the amount of money owed to municipalities by other arms of government is a drop in the ocean compared to what the public owes local governments. According to the national treasury’s most recent report on local government revenue and expenditure for the third quarter of 2015, municipalities are owed R104-billion. 

Of this households owed municipalities R66.8-billion or over 63%. 

When the treasury released the figures in June, government debtors represented 5% or R5.2-billion of the total outstanding debt, indicating that the government’s debt to municipalities has been on the decline. 

The treasury said in a statement at the time that not all the debt was “realistically collectible as these amounts are inclusive of debt older than 90 days (historic debt that has accumulated over an extended period, interest on arrears and other recoverables”. 

“If rates and consumer debt is limited to below 90 days, and all interest is excluded from the calculation then the actual realistically collectible amount is estimated at R20.8-billion,” the treasury said. 

The country’s large metros were owed the most – accounting for roughly half or all outstanding debts – or R57.5-billion – according to the treasury. 

After households, private businesses owed metros the most money accounting for R17.1-billion or 29.8%.

Deputy minister for performance monitoring and evaluation Buti Manamela said that through the president’s co-ordinating council the national treasury is working closely with CoGTA, and the national and provincial departments to ensure that the money owed to municipalities was paid. 

“Both the president and the premiers are taking this matter quite seriously,” he said.

Most municipalities were dependent on the money paid for services, as revenue Manamela said. 

He added that it was not only national and provincial authorities that have been defaulting on paying for municipal services. 

“It’s a general call that all those who owe municipalities, including private businesses should ensure that [they] are paid what is due to them,” he said.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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