Municipalities were already buckling under pressure before the outbreak of Covid-19 but the coronavirus has compounded the problem
MINISTER of Cooperative Governance and Traditional Affairs Nkosazana Dlamini Zuma has warned that the finances of municipalities will be further eroded due to the impact of Covid-19 after many people lost their jobs and would not be able to pay for services.
The municipalities were already buckling under pressure before the outbreak of Covid-19 but the coronavirus has compounded the problem.
The loss of jobs would lead to fewer people paying for rates and services, said Dlamini Zuma.
The minister was on Tuesday addressing the session of the National Council of Provinces on issues affecting local government.
Many of the municipalities are in serious financial trouble, with Auditor-General Kimi Makwetu, in his last report, identifying losses of billions of rand through irregular expenditure.
Dlamini Zuma said the issue of the pandemic was a serious concern for local government in terms of low revenue collection.
“This in turn had adverse impact on the local sphere of governance, with many households struggling to keep up with the payment of services. This resulted in households owing over R127.7 billion to municipalities at the end of the municipal financial year in June. Slowed business activities, tax evasion and inadequate collection systems resulted in a total debt of R181.3 billion of which R28.9 billion was owed by businesses and R18.1 billion by government in all its spheres at the end of the municipal financial year,” said Dlamini Zuma.
“This weighed on municipal creditors with municipalities paying them at an average of 180 days, as opposed to the 30-day government policy. At year end the municipalities owed over R53 billion to creditors of which about R11.3 billion was owed to Eskom and R6.2 4billion was being owed to waterboards.”