As I indicated in the State of the City Address just a few weeks ago that our city’s finances have been negatively impacted by the COVID-19 virus and its attendant lockdowns. The pandemic has created a reality where the number of people who are unable to pay for services increased and we had to relax the implementation of our Credit Control Policy due to the hard lockdown.
Despite this reality, we can service our long-term and short-term debt, and this is why we have consistently maintained an A credit rating from rating agencies. What we are experiencing now is a cash flow problem that is being managed through the implementation of cost-containment measures, expenditure management and enhanced revenue collection methods.
We want to indicate that the municipality is able to meet its monthly obligations as we can make bulk purchases of electricity from Eskom and water from Amatola Water. We are also able to pay our staff salaries so that they can deliver services to our communities.
After reviewing our revenue collection, we have had to have a go-slow in the implementation of some of our projects that are funded by the money that is received through the payment of services by residents, businesses, and the government. In the last financial year, our collection rate was 71 percent, and we need to have an overage collection rate of around 80 percent or more if we are to better implement our projects.
Domestic households owe a combined R 3,1 billion, businesses owe a combined R1, 3 billion and government owe a combined R 65, 3 million. From government departments, the biggest debt is by Public Works which owes R30, 3 million. We have therefore been left with no option but to fully implement our Credit Control Policy to recover the over R4 billion debt that it is owed.
I must however indicate that basic infrastructure maintenance has not been affected by the decision as a lot of work is done by our internal units and we are also able to implement projects that are funded through grants. Our finance directorate will be monitoring the situation and we are confident that it will improve as we fully implement our credit control policy.
It is in this spirit that we want to urge those that owe the municipality to come forward and make payments or arrangements so that we can be in a healthier financial position.
The biggest debtors have been identified and the process of issuing individual notices has begun. The Metro is calling on the debtors to pay and void operating in the dark as this will have serious implications and loss of revenue.
We also want to announce that Council has taken a resolution to offer our consumers a huge discount scheme that will offer massive incentives for those in debt. This offer allows those that are prepared to settle their accounts to get up to 50 percent discounts. There are also incentives for those who pay their current debt to be able to get into discount arrangements with the Municipality. The details of this debt incentive scheme are available on our social media platforms and in other relevant media platforms.
It will be remiss of me not to reflect on the fact that there is a false narrative that is being peddled by some doomsayers that the municipality is in a state of financial disaster and these people have decided to believe their own lies and misinformation. It should seem that these lies are also intended at creating an attitude of non-payment amongst our consumers and strangely we do not know why people would want consumers not to pay for services in a manner that impacts negatively on the municipality. We, therefore, urge consumers to not believe the propaganda campaign that is led with sinister intention, and we request them to settle their accounts and do so on time.
In the State of the City Address I made an indication that for us to implement our programme of development, we require residents and stakeholders to pay their accounts in time.
I want to once more appeal to your inner patriotic spirit – please settle your accounts and if you cannot settle them at once, we are willing to enter a payment arrangement with you. The financial health of our municipality depends on all of us – let us all do our part.
Issued by the Executive Mayor of Buffalo City Metro
Cllr Xola Pakati
For arranging interviews with the Executive Mayor contact Luzuko Buku on 0832548463