Madibeng mulls over debit orders to recover revenue

Madibeng municipality management, governing rural towns in the North West, says it is battling to deliver services due to R3.2bn owed to it by entities and residents. 

The municipality is situated 50km north of Pretoria and governs the tourist attraction Hartbeespoort. It also governs Brits and Mooinooi. 

Speaking to Sowetan’s sister publication TimesLIVE, mayor Douglas Maimane described the municipality’s finances as being in “tatters”. 

Maimane said because of its dire financial state, the municipality planned to implement rates and services debit orders for councillors who owe the municipality to “pay back the money”. 

“The auditor-general’s report did not say anything good about us. We were found wanting in terms of revenue enhancement and record-keeping. Our expenditure and income are in tatters. We have an unfunded budget due to lack of revenue,” he said. 

In the municipality’s 2022/23 draft budget report it was stipulated it had a budget of R2.5bn operating expenditure and R361.9m for big projects.

The report stated the municipality would likely operate with a deficit for the next five years.  

“The municipality cannot pay its creditors within 30 days. It has entered into payment arrangements with bulk suppliers but that does not help because the municipality keeps defaulting. The municipality is technically bankrupt. The cash levels will not be able to address the creditors’ balances,” the budget draft report read.  

Last July, Sowetan’s sister publication Business Day reported the Gauteng High Court in Pretoria granted the City of Tshwane permission to attach the account of Madibeng municipality in an effort to force it to settle a R258m debt for bulk water.

In August 2021, the Tshwane metro threatened to restrict water supply to Madibeng due to an unpaid R40m debt. 

Maimane said since December last year, the municipality embarked on an aggressive revenue campaign, Operation Patella, to improve its finances.

According to the budget report, the municipality had an average of 78% revenue collection, which plummeted during the Covid-19 hard lockdown. 

“We are using equitable shares [government conditional grants] to settle accounts because people are not paying their accounts. We take money we are supposed to use to repair potholes and take it to Rand Water and Eskom to settle debt,” said Maimane.

“We are struggling to do projects such as supply of water and installation of meters in informal settlements because all informal settlements are illegally connected to the grid. We are struggling to do all those projects because there is R3.2bn in the hands of people out there.” 

He said the municipality managed to recover about R50m through the revenue collection project in the past three months. 

Maimane said the municipality was planning to implement a flat rate in rural areas for consumers to boost its revenue. 

“It will be an affordable rate because in some areas we do not have meters but there is service consumption.”

In the budget, the municipality estimated it has about 16,000 accounts in rural areas  for whom the municipality was planning to implement a flat rate to increase revenue by R13m a year, assuming the flat rate was set at R72 per household. 

“We also have a large scale of illegal connections in our electrical system in the areas of Lethlabile in Brits.” 

He said the municipality would start with a project to recover money from those illegally connected to the grid.