Northern Cape Government debt to municipalities undermines service delivery

by Andrew Louw – Provincial Leader and Spokesperson of COGHSTA

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Date: 28 March 2018

Release: Immediate

The Democratic Alliance is deeply concerned by the excessive amount of debt owed to municipalities in the province.

A presentation by National Treasury at the legislature yesterday revealed that debt owed to Northern Cape municipalities totals R708, 494 million. This ranks the province as having the third highest amount of debt owed to local government institutions, which is exceeded only by debt of R919, 646 million owed to Free State municipalities and debt of R713, 250 million owed to Kwa-Zulu Natal municipalities.

Municipal debt is a major problem and directly affects local government’s ability to render services. A municipality’s ability to function depends on the money it collects from other spheres of government and ratepayers. Without a revenue stream, it cannot deliver services or invest in infrastructure.

Outstanding debt also exacerbates municipalities’ inability to pay their creditors, such as Eskom and their respective water boards, with dire consequences for the provision of electricity and water to residents.

The DA is aware that Roads and Public Works, which is responsible for rates and taxes payments to municipalities on behalf of all government departments, is the main culprit, especially with reference to outstanding debt owed to Sol Plaatje municipality for the new mental hospital and the Mitta Seperepere Convention Centre. This is an old, unresolved issue that has been brushed aside for years and been allowed to burgeon out of control. The failure of the department to settle these payments, has also resulted in long, drawn-out disputes, further compromising municipalities.

The DA will submit parliamentary questions to COGHSTA MEC, Bentley Vass, to ascertain exactly which departments are responsible for the outstanding debt, how much they owe, which municipalities are affected, as well as what government is doing to solve the problem.

We are tired of hearing that this matter is being discussed on a “national level”. This has been the run of the mill response for years.

It’s time for action. R708, 494 million can make a huge difference in the cash flow and of Northern Cape municipalities and improve their ability to deliver services.

The DA calls on MEC Vass to take ownership of this massive service delivery impediment. He needs to be the forerunner in negotiating a settlement between COGHSTA, Provincial Treasury and the culprit departments to ensure that debt is cleared.

He also needs to focus his attention on rectifying billing systems across all municipalities, as this continues to be a contributing factor in municipalities’ inability to efficiently collect outstanding debt.

Media Enquiries

Andrew Louw

Provincial Leader and Spokesperson of COGHSTA

082 383 6914

Shelley De Witt

Researcher

082 847 1387