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City Of Cape Town’s Debt Increases To R9.3bn

The nationwide lockdown has unkind to the City’s coffers as its debt ballooned to R9.3 billion because of its inability to collect about R1bn in rates as well as taxes and other services, partly because offices were closed.

Mayco member for finance and deputy mayor Ian Neilson said: “The City continues to keep a very close eye on this as the primary source of income for the delivery of basic services is from rates and service income. It has maintained since the start of the Covid-19 crisis that it will do everything in its power to ensure there is relief while making sure the municipality can continue to perform its main functions.

“This balance has clearly had a positive impact as although total debt has increased, the risk is far lower than would have been were it not for the City’s financial interventions and management. Cash flows remain adequate and the City’s operations are not being affected at this stage.”

Neilson said there was an underpayment of more than R1bn during the lockdown. “This money is not lost, as it remains due,” he said.

He said the outstanding debt for rates and services owed to the City as at August 31 was R9.3 billion, which included the current amount due, but not yet payable.

“The City is working on recovery plans, injecting some life into the local economy and looking at all debt management options. It also depends on how long it takes the national economy to recover to pre-Covid-19 levels and the decisions that the national government takes,” he said.

As of August 31, a total of 25 573 residents who met the criteria were registered and are receiving rates rebates for owners dependent on pension and social grant for their livelihood.

There were 25 627 payment arrangements entered into by property owners/businesses, etc, unable to pay their municipal accounts in full or who have had arrears on their municipal accounts.

According to the City’s ratio and collections report for July, the bulk of the debt outstanding is linked to residential properties owing R6.060bn and business properties owing R4.941bn coupled with other debts outstanding at R1bn.

During the month of July, 1 043 accounts with a total debt outstanding of R47.9m were handed over to attorneys for debt recovery.

ACDP caucus leader Grant Haskin said: “The City’s entire budget process is back to front. It should set service charges at an affordable level for ratepayers, and then plan to deliver services and limited new projects based on that income. Instead, it first decides on the projects and services for the year, and then sets the charges at a level that it hope’s will fund it all, regardless of affordability for ratepayers.”

He said the City should “cut the suit according to the size of the cloth”.

Cope caucus leader Farouk Cassim said residents should be concerned.

“If payments are not made it could lead to many social issues. But what should be more alarming is that if they (the City) do not get these payments there is a likelihood of many projects being affected and there will be problems in the next financial year.”

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