South African Towns Struggle to Collect $11.1 Billion Debt
South African Towns Struggle to Collect $11.1 Billion 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 191.5 billion rand ($11.1 billion) by the end the financial year through June 30, from 181.3 billion rand 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 33.4 billion rand,” 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 60 billion rand by June 30.
The eight metropolitan municipalities are owed 102.3 billion rand. 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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