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Outstanding debt up 9%

The Covid-19 pandemic along with the strict lockdown regulations not only had a huge financial impact on businesses and households, but municipalities nationwide also suffered financial loss, so too the Drakenstein Municipality.

With many residents losing their jobs during lockdown and businesses being forced to ask their employees to take salary cuts, many residents are not able to pay their municipal bills.

Last week Netwerk24 reported Dr Nkosazana Dlamini-Zuma, Minister of Cooperative Governance and Traditional Affairs, said in her keynote address at the National Council of Provinces’ (NCOP) high-level session on Local Government Week, that 125 municipalities across the country are unsustainable and Covid-19 has made things worse.

Dlamini-Zuma also said by the end of June – the end of the municipal financial year – households together nationwide had more than R127 billion in municipal debt.

According to Bradley Brown, Chief Financial Officer at Drakenstein Municipality, the outstanding debt on 31 August 2020 amounted to R410 876 116. This represents a growth of R33 182 040 or 9% compared to August 2019.

Dlamini-Zuma further said delayed business activities, tax evasion and improper collection systems have resulted in a total debt of R181,3 billion, of which R28,9 billion is owed by businesses and R18,1 billion by all spheres of government to municipalities.

Here in Drakenstein Brown said business debt also increased, compared to that of last hear.

“Compared year on year, business debt to the municipality increased by 6%, ie from R98 340 462 in August 2019 to R104 532 125 in August 2020.”

Some municipalities still owe Eskom money, but Brown said this is not the case in Drakenstein. He said Eskom is fully paid and Drakenstein has no outstanding debt.

“In the interest of good financial management, governance and stability, the municipality pays all its creditors within 30 days of receipt of invoice.”

About the effect the lockdown had on municipal finances, Brown said: “As in many other industries, the economic activities allowed within the different levels of lockdown also affected Drakenstein Municipality’s revenue negatively and credit control measures could not be implemented. The municipality has put in place various revenue generation plans and actions, and manages all expenditure in a careful and prudent way, while continuously monitoring our financial affairs.”

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