The Nelson Mandela Bay municipality’s revenue collection rate is at an all-time low – a meagre 78% in September against a target of 94%.
This comes as municipal bills have not been sent out to residents since August – because, DA councillor Retief Odendaal claimed on Monday, of alleged management problems in the city’s budget and treasury department.
But new budget and treasury political head Mkhuseli Mtsila hit back, saying the havoc with the metro’s finances was as a result of weak political leadership from Odendaal.
Mtsila said the city was going through a massive backlog of accounts that had accumulated since the city’s contract with service provider Cab Holdings came to an end.
He said Cab Holdings was responsible for sending statements to residents.
“First of all, the poor revenue collection rate is a historic trend and it happened during Odendaal’s time,” Mtsila said.
“The collection rate will recover and we will reach our target of 94%. One of the factors that have led to this is that ratepayers have other options to pay their rates – this has been exacerbated by annual ratepayers who pay their rates much later.
“That has had a negative impact – this has happened in previous years. These are the trends that happen and the DA knows this.”
Mtsila said the tender process for a new service provider took time.
He said residents had been notified by SMS and via newspapers about the delays in sending out accounts.
Meanwhile, the poor revenue collection rate has prompted the Bay DA to make a move to submit a motion of exigency for the city manager to write off all interest accrued by residents who have not paid their bills on time as a result of not receiving their accounts.
Odendaal said the poor collection rate meant service delivery could be affected.
“We are sitting at a 78.8% collection rate,” he said.
“If this continues, we will no longer have a funded budget by the end of this financial year.
“This means that we are going to have to take some very difficult decisions when it comes to the adjustments budget to ensure that our budget is actually funded.
“We will probably have to cut back on our service delivery areas so we can fund our budget and have money to make up for the shortfall.”
Odendaal said he had been inundated with calls from residents whose electricity had been disconnected as a result of short payments.
“It’s business 101 – if you're not sending accounts, people are not going to pay,” he said.
“You don’t have to look very far for the reason that the collection rate has dropped so significantly.
“It’s simply because you have not issued accounts. It creates absolute havoc.”
DA councillor Nqaba Bhanga said at a media briefing at the party’s provincial head office in Mount Road on Monday that the motion of exigency would be tabled at Friday’s special council meeting.
He said he feared the poor revenue collection rate would lead to a budgeted revenue shortfall of at least R500m in the 2018/2019 financial year.
“The DA believes that this drastic drop in the collection rate is a direct result of the fact that the city has not been issuing municipal accounts for the last two months,” he said.
“In spite of this, residents have been charged interest on late account payments and, in certain instances, reconnection fees where their accounts were suspended due to not paying on the due date.”
Bhanga said the city’s creditors repayment rate was also a cause for concern.
“This is an unacceptable situation and will ensure that small businesses and emerging contractors eventually end up with severe cashflow problems, leading to a direct cause of job losses in the city.”
He said the motion of exigency would request acting city manager Noxolo Nqwazi to intervene and ensure that interest accrued on late accounts be written off by the municipality.
Mtsila said they would study the motion.
He said, however, he was worried that writing off any interest would negatively affect the city's collection rate and the target set come the end of the financial year.