South Africa’s government is terrible at paying its bills
National and provincial governments owe R22 billion to municipalities in South Africa – but the municipalities themselves owe billions more to other government entities, like Eskom.
Responding in a recent parliamentary Q&A, Finance Minister Enoch Godongwana noted that the debt owed to municipalities by national and provincial departments for the financial period ending 31 December 2023 stood at R22.07 billion.
Broken down, this is:
- R8.02 billion owed by National Departments
- R9.76 billion owed by Provincial Departments
- R4.29 billion owed by other entities and institutions
The Minister said the National Treasury is encouraging municipalities to enforce credit control and debt management policies and bylaws to recover the funds.
“This implies that if any organ of the state neglects to honour their payment arrangement for services rendered by municipalities within the legislative timeframe of 30 days as per the PFMA and MFMA, the municipal, by law, must proceed to terminate or restrict the services to those customers (including government departments and businesses) with immediate effect,” said Godongwana.
“Even if the customer questions the accuracy of the bill issued by municipalities, which may be a valid concern, it is not acceptable not to honour the payment for services that were consumed.”
“In some cases, dependent on the specific credit control and debt management policy, the customer may have to pay first before any dispute is resolved.”
Despite the 30-day legislative timeframe, many government departments take a long time to settle their accounts.
For instance, the National Department of Public Works has R2.28 billion worth of debt over a year old.
National Treasury also implemented legislative mechanisms, complemented by specific MFMA circulars relating to budgeting and debt, to help municipalities towards financial stability and correctly apply debtors’ management and collection to all customers, including organs of state debt.
“Currently, the National Treasury initiatives include smart solutions to enhance consumption accuracy by enabling precise tracking and billing, optimizing revenue collection, and ensuring fair charges for actual usage.”
Both ways
The irony of national and provincial government departments’ failure to pay their bills to municipalities sits on top of the fact that municipalities themselves are also leaving state-owned entities high and dry.
Eskom has often highlighted its own struggles with municipalities not paying for electricity, with arrear municipal debt escalating by from R44.8 billion in March 2022 to R58.5 billion only a year later.
Eskom previously warned that non-payment affects its liquidity and financial stability.
Rand Water has also threatened to shut off water to non-paying municipalities, with municipal debt escalating to R3 billion— R2 billion from Gauteng councils and R1 billion from those in Mpumalanga.
The cash-strapped utility is contemplating declaring an intergovernmental financial dispute.
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