Covid-19 bleeds Durban dry, but Cape Town is OK, for now

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Covid-19 bleeds Durban dry, but Cape Town is OK, for now

‘No income from rates and services will mean no services. It is as simple as that’

Journalist
Municipal services are funded by rates and tariff income, as per the South African municipal finance model.
Municipal services are funded by rates and tariff income, as per the South African municipal finance model.
Image: 123rf.com/Gina Sanders

The eThekwini Municipality has only 50 days of cash in hand.

Municipal spokesperson Mandla Nsele told Times Select that the strained cash flow could see many service-delivery challenges in June as “there will not be enough monies available to meet all expenditure”.

“The consequences of the pandemic have left the city’s coffers in a tremendous deficit. In level 5 there was a 23% drop in demand for electricity and a 15 % drop in demand for water due to businesses and industries being closed.

“The city is sitting with a R1.5bn loss since March. The collection rate for April was 56%. The downscale to level 4 is expected to improve consumption; however, collection rates are expected to further reduce as consumers suffer the consequences of the lockdown,” he said.

The city was grateful to those residents who continued to make payments during lockdown, he said, and urged those who could no longer afford to do so to contact the municipality for payment arrangements.

“Consumers are encouraged to not let their debt grow out of control, as the city will not be able to afford any write-offs. The city has not charged interest for the month of April on overdue accounts and an appeal to the executive committee will be made to consider the same for May.”

Cape Town’s executive deputy mayor, Ian Neilson, said because of the structure of the municipal finance model, any big concessions now, such as blanket payment holidays, would have an impact on ratepayers especially and residents in general over the medium term.

“So we must be careful not to over-burden people in the future, while only focusing on the immediate picture.

“Municipal services are funded by rates and tariff income, as per the South African municipal finance model. The city has been extremely well managed for more than a decade. It is thus in a position now, for a short period of time, to keep delivering services, even though there are already signs of a huge loss of income. It faces a more than R4bn projected additional Covid-19 impact for the new financial year, without any national government crisis funds allocation to the city.”

He added that the city had “substantial financial relief” on offer.

“Again, also in the new financial year, more than R3bn is set aside to assist residents and ratepayers. It also provides free basic water provision to approximately 40% of the households in the Cape Town metro. It is a given that payments for municipal services are often seen as grudge payments, but no income from rates and services will mean no services. It is as simple as that.”

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