South Africans owe municipalities billions of rands in debt for basic services such as electricity and water – which has been outstanding so long, that it’s not realistically collectable.<\/p>\n
Worse yet, with the current economic path the country is taking, consumers are set to face added pressure in the fourth quarter.<\/p>\n
According to the latest Local Government Revenue & Expenditure<\/a> report by National Treasury, South Africa’s eight biggest municipalities are owed over R56.7 billion by households and businesses.<\/p>\n The outstanding debt is attributable to unpaid fees for municipal services such as electricity and water. Three quarters of the total is overdue by 90 days or more.<\/p>\n The City of Johannesburg is the biggest culprit, where just over R16 billion is owed. This is followed by Ekurhuleni, where residents and businesses owe R11.9 billion.<\/p>\n This is how the top 8 municipalities stack up (amounts rounded):<\/p>\n The data shows that households in metropolitan areas account for R35.6 billion or 62.7% of outstanding debt to metros, followed by businesses which account for R17.7 billion or 31.1%.<\/p>\n Debt owed by government agencies is approximately R1.7 billion or 2.9% of the total outstanding debt owed to metros.<\/p>\n Aggregate municipal consumer debts (across all municipalities) amounted to R113.5 billion<\/strong> (compared to R108.6 billion reported in the third quarter) as at 30 June 2016. A total amount of R4.1 billion has been written off as bad debt.<\/p>\n However, It needs to be acknowledged that not all the outstanding debt of R113.5 billion is realistically collectable as these amounts are inclusive of debt older than 90 days.<\/p>\n If consumer debt is limited to below 90 days, then the actual “realistically collectable” amount is estimated at only R22.9 billion<\/strong>, Treasury said.<\/p>\n South Africans are increasingly feeling the pressure of crushing debt in the country, with a new survey showing that 42% of 6,000 respondents are stressing about their debt situation.<\/p>\n The country’s economy has been hit by a turbulent 2016, with a weakening economy exacerbated by political turmoil and global events. Economists and analysts do not hold much hope for the remainder of 2016, where a number of political shocks are anticipated, which will have dire consequences for the economy.<\/p>\n According to economist Dawie Roodt, if \u201can inevitable downgrade\u201d materialises from global ratings agencies in December – as is expected – many consumers are “going to experience a great deal of pain”.<\/p>\n “The downgrade will mean that interest rates will inevitably rise as will inflation. Depending on the actions and utterances of our esteemed President Jacob Zuma, the economy could go into a total tailspin with disastrous consequences for consumers,” he said.<\/p>\n Should I use my investments to settle debt?<\/a><\/strong><\/p>\n Debt shock for South Africans as tough economy bites<\/a><\/strong><\/p>\n One graph shows how bad South Africa\u2019s consumer debt is<\/a><\/strong><\/p>\n\n
More on debt<\/h3>\n