National Treasury's latest report on the state of the City of Johannesburg's finances has revealed all is not well with its billing system. It is owed a whopping R17.2 billion, a situation that has not improved despite its bids to sort out the invoicing situation.
The city's indebtedness has been ascribed to its declining ability to provide accurate bills, with some 110 000 residents and businesses complaining each month that the invoices are wrong, and a failure to resolve old errors. As a result, there are fears that a continuation in the trend will see a resurgence of the billing crisis blamed on post-implementation issues with a SAP migration.
According to the treasury's document, municipalities across South Africa are collectively owed R48.7 billion, of which the largest amount is due to the city of Johannesburg. In addition, treasury notes its debtors have grown by between 10% and 20% by the end of June.
Treasury says the underperformance on collections is due to several reasons, including the affordability of municipal services and the ongoing economic slowdown. The department adds municipalities also have poorly designed revenue management, indigent and debtor policies, and there is resistance among certain communities to pay for certain types of services or to be billed in a particular way.
However, Democratic Alliance councillor Patrick Atkinson says the city's collection is hampered by legacy billing issues, which date back to the crisis caused by post-implementation aspects of project Phakama. He says, of the amount owed to the city, about a third is "inflated" and not collectable because it is based on incorrect bills that have yet to be sorted out.
Project Phakama was the city's bid to move its disparate systems onto a SAP platform at a cost of at least R580 million. However, the shift caused around 8% of citizens to lodge queries over their bills, some of which were grossly inflated.
Atkinson says, based on the finance committee oversight report, 11.03% of bills sent out in the three months to September contained inaccuracies. He says, if the trend continues, the situation will revert to the crisis period with the city battling to clear a backlog of problems again. "We're going backwards; we're going back to where we were."
In addition, there has been a 22.8% increase in returned mail quarter-on-quarter, while only 88% of bills reach their physical destination, says Atkinson. He says this points to issues with the integrity of the city's database.
The city has yet to respond to a query about the accuracy of the bills it sends out, but said last month its invoicing rate is at 98.80%, but its distribution level is at 88.52%.
Inaccuracies in the city's database were highlighted earlier this year when the city apologised to the Mandela family after confirming a pre-termination notice was incorrectly delivered, and the address and account number belong to another customer and property in a neighbouring suburb, not to the Mandela residence.
In a bid to make sure invoices reach their recipients, Johannesburg has also embarked on a campaign to get some 700 000 residents to sign up to get bills via MMS. The city was not able this morning to comment on what progress it has made in this endeavour.
Atkinson adds much of the overdue amount is due to people paying because they have no faith in the city's ability to bill correctly, while other invoices will not have been paid as they are owed by the poor. The city has more than a million account-holders.
The city has "closed its eyes" to older queries and people are still fighting to get incorrect bills sorted out, says Atkinson. He adds that, over the past three months, the accuracy rate of invoices going out has gone backwards, which does not bode well for the city's ability to collect money.
The city has received three consecutive qualified audits, and is in line for a fourth, notes Atkinson. He says the root cause of this is a lack of skills, and points out it has only just hired a CFO; filling a slot that has been open for nine months.
Atkinson adds project Phakama was not implemented properly from the start, and part of the problem is the quality of data being entered into the system. He adds the system should check for variances from previous months' bills to pick up incorrect invoices, but "people do still get ridiculous bills, which is just mind-boggling".
Earlier this year, the auditor-general found differences between source data and billing data on the sale of water and electricity. "There were material deficiencies that were identified during the audit of revenue from service charges, which raised uncertainties regarding the accuracy and occurrence of revenue and consumer debtors' financial data."
After the report, the city developed a 115-page plan of action in a bid to achieve an unqualified opinion this financial year, and a clean audit in the next year. Among the measures it said it would put in place was to clean its database and implement systems to deal with manual estimates, and disregarded meter readings.
The city was not this morning able to comment on treasury's report as it is preparing for tomorrow's memorial service for former president Nelson Mandela, who died last Thursday evening.
Atkinson adds its e-services has not been running for months since its online system was allegedly breached in August, which means citizens cannot transact online. He notes its call centre has also not been working well recently.
ITWeb has repeatedly asked the city when this service would be restored, but has not received an answer. The site has a message saying: "The city of Johannesburg is currently experiencing technical challenges with the online viewing of e-statements.
"The problem has been identified and we are working around the clock to rectify the situation. We do not believe this issue is widespread as this matter was identified in good time."