South Africa

Ethekwini debt: senior employees among defaulters

Ethekwini debt: senior employees among defaulters

Ethekwini debt: senior employees among defaulters

By Thami Magubane Time of article published 33m ago

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Durban – SENIOR managers and executives employed by eThekwini Municipality are not leading by example as they are among those contributing to the city’s debt crisis which has ballooned by almost R2 billion from last year.

About 3 000 staff members owe the council R22 million for rates and services, with the executive, senior managers and managers contributing R1.8m to the spiralling debt.

In a budget statement tabled before the executive committee on Tuesday, the city revealed that it had a total outstanding debt of R14.7 billion, representing an increase of R1.9 bn, which was about 14.96% compared to December 2019.

Of the total debt of R14.7bn, R5.9bn represented collection challenges which would take a longer period to recover. The challenges were due to slow/non-payment, legal disputes and customer financial affordability.

The statement revealed that councillors, ward committee members and the city’s own staff were among those who were contributing to the debt. From December last year there were 22 councillors, 166 ward committee members, and 2 976 staff members whose accounts were in arrears, to the tune of R24 259 063.

At least 31 of the defaulters were in executive and senior management positions, 116 were in management, 2 829 were classified as “other staff”, owing a total of R22 243 222.

A further breakdown shows that the executive and senior management employees owe the council about R565 868 and those in management owe R1 383, 229. The rest of the R20 294 124 is owed by other staff.

“Staff and councillors are also subjected to credit control processes including disconnections, redlining with the credit bureau and legal processes. Monthly salary deductions from staff accounts are also done but the deductions are limited to 25% of the net salary,” said the budget statement.

DA councillor Nicole Graham said there was a lack of political will to arrest the debt crisis facing the municipality.

“Councillors do end up in the ethics committee if they owe money, and managers at the executive level. There is really no excuse for it. But the biggest culprits are parastatals, government departments, Tansnat (and) Ingonyama Trust. They are the same culprits year in and year out and the numbers seldom change. Councillors and managers should be held accountable and disconnected if they owe money, but there is a far bigger picture,” she said

IFP councillor Mdu Nkosi said it was unsettling that managers and executives were counted among those who owed the municipality.

“When reports like this come out, how are the regular community members supposed to feel? They will question why they should pay for services if the municipality’s own staff are not paying. The law is clear: it is illegal for the staff and the councillors to owe the municipality. The managers get paid very well; they should not be implicated in such,” Nkosi said.

The city blamed Covid-9 as the reason for customers’ inability to meet their obligations.

“(The) Covid-19 crisis, which started in 2020 and is still continuing in 2021, has had a negative effect on companies and individuals. This has resulted in customers struggling to pay their accounts.

“The City has put measures in place to minimise the impact and increase in debt, and these measures include an extended Covid-19 payment relief plan, bulk SMS notifications and the gradual implementation of disconnections for non-payment,” it said.

The report on the debt analysis showed that it was not just individual consumers and businesses that were struggling to pay, there were also government departments and government entities that contributed a large portion to the debt.

Some of the government entities have started paying their accounts after they received disconnection notices.

The breakdown of government debt shows that the total government debt equates to R753m, of which R105m is for the national government, R454m the provincial government and R194m for the Ingonyama Trust.

On the provincial government debts, it said that for the Section 21 Schools, R9.9 million had been received and outstanding debt would be settled once approval of payment has been processed by the department. The Department of Education has indicated it would pay 30% of the debt.

The report also spoke of some of the city’s entities that were owing and not doing well, putting their ability to pay in question.

EThekwini spokesperson Msawakhe Mayisela said the city was taking all the necessary steps to recoup what was owed to it.

He said debt has increased due to the suspension of credit control procedures for a several months when there was lockdown. This was done as a courtesy as some residents were facing financial difficulties. Disconnections were not being actioned during that time.

“The normal credit control processes like disconnections, redlining them with the credit bureau, final demands and judgments are used to recoup monies.

“Salaries are also deducted, although the deduction is limited to 25% of the net salary. No one is protected. Staff are treated the same as ordinary customers when it comes to disconnections. Even more so because with staff, monies can be deducted from their salaries if they fail to pay,” Mayisela said.

The Mercury

Original Article

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