Broke Eastern Cape municipality writes off R1.2bn debt owed by residents, businesses

• The Amathole District Municipality has written off R1.2 billion worth of bad debts.
• It announced that despite embarking on vigorous debt collecting initiatives, its customers would not pay. 
• It said the debt had been escalated by poor customers who failed to apply for indigent subsidies.

The cash-strapped Amathole District Municipality in the Eastern Cape has written off R1.2 billion in irrecoverable debt owed to the council by businesses and the public for municipal services such as water and electricity.  

The municipality announced in a statement that the council had approved the move during an meeting held at the Calgary Conference Centre outside East London on 29 April. 

The approval is in line with the municipality’s credit control and debt collection policy which gives it authority to write off debt regarded as irrecoverable. 

The R 1 218 421 238 debt is divided across nine categories:

The municipality revealed that it was unable to recover the debt despite conducting vigorous debt collecting initiatives.

The municipality said that, in addition to these challenges, there was also "constant" theft and misuse of water by residents. 

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The municipality was implementing measures to reduce illegal connections and and other abuses of the system, said spokesperson Nonceba Madikizela-Vuso. 

Madikizela-Vuso said a factor adding to the debt was poor domestic consumers who failed to apply for an indigent subsidy and therefore ended up being billed for services they could not afford.

The irrecoverable debt will worsen the financial problems of the municipality which is already getting support from the provincial and national government so it can get back on its feet.

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At the beginning of 2021, it needed a R180-million government bailout to pay four months' salary to its bloated 1 670-strong workforce. 

Municipal manager Thandekile Mnyimba previously revealed that an unaffordable salary bill had caused its financial crisis. He said 900 people were hired in positions not "within its organogram".  

Of the 900 people employed outside of the organogram, the municipality said that 500 were hired in a single month in 2013, in what it termed "mass employment".

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