The City of Johannesburg is owed R14.3 billion by ratepayers, the bulk of which has been due for more than three months, as it endeavours to sort out a billing crisis that has plagued residents for more than a year.
The city's debtors' book accounts for 31.8% of all debt owed to municipalities in SA, which totals R45 billion. However, there are questions as to how much of that amount is actually due to the city, as there are still outstanding queries from residents who have received grossly inflated statements.
According to National Treasury's latest report on local government revenue and expenditure, for the nine months to March, Johannesburg has been owed R11.2 billion for more than 90 days, an increase on last year's three-month book of R8.4 billion.
In March, the city vowed to clear all queries relating to bills that pre-dated last October by the end of this month. At the time, there were about 100 000 queries from the city's 1.3 million accountholders that related to billing issues, of which 66 000 dated back to the end of October.
The issues with inflated statements and incorrect readings, among others, stemmed from post-implementation issues with project Phakama. The project aimed to move the city's disparate legacy systems onto a SAP platform, at a cost of R580 million.
Overdue
According to treasury, R2 billion was due for less than 30 days, R610 million for between 31 and 60 days, and R429 million for between two and three months. However, 78.3% of what the city is owed has been outstanding for more than three months.
Johannesburg spokesman Stan Maphologela explains that the main factor contributing to the growth in the debtors' book is because the city has not written off any arrears since moving to SAP. “The main reason for putting write-offs on hold was to ensure that our new system, SAP, is stabilised and data cleansing processes completed.”
However, Democratic Alliance spokesman councillor Patrick Atkinson says the overdue amount has “got billing crisis written all over it”.
At the end of last June, treasury found the city was owed R12.1 billion, of which R8.9 billion was overdue for more than 90 days. The previous year, the city was owed R8.4 billion, of which R6.9 billion was more than 90 days overdue.
Atkinson says about 30% to 40% of the R14.3 billion is collectable as some of the outstanding amounts may not even be due, because of the inflated bills that arose because of the billing crisis.
Holding pattern
Johannesburg cannot make a serious effort to collect the money until queries are resolved, which is expected to happen at the end of this month, notes Atkinson. He says it cannot cut people off to force them to pay until it resolves their outstanding issues.
In December, the South Gauteng High Court ordered the city cannot disconnect residents' water or power when they have logged a genuine query and are paying an average amount each month.
The city cannot collect because it is “hamstrung” by queries and needs to work out what can be brought in as some of the debt could be owed by companies that have gone bust as the overdue amount has been accumulated over years, says Atkinson.
Maphologela says the city has started a process of analysing the debtors' book to start writing off “indigent debtors” and is also looking at writing off amounts that have prescribed, are untraceable and cannot be recovered.
Johannesburg is also reviving credit control and using attorneys to recover debt, says Maphologela.
Under-spending
Atkinson says the city needs a collection rate of 94% to meet its operational budget, but is currently collecting about 6% less than that. He explains this has led to it trimming service delivery, such as cutting down on funding clinics.
Lee Cahill, founding member of the Joburg Advocacy Group (JAG), says the “high level of debt is clear testimony to the fact that the billing crisis remains unresolved”.
In addition, despite the fact that service delivery remains sadly wanting, JAG is concerned that the city has only spent 42.2% of its budget for the current financial year. “This is indicative of poor financial and operational management, and we can only call on the city to explain why this has happened, especially in light of recent service delivery protests.”
Treasury also notes that the city has only spent 42.2% of its budget for the current financial year. Maphologela says the spending pattern is consistent with prior years and the city has not cut back on service delivery.
Share