As at December 2007, municipalities were owed a total of R44.2 billion by the various consumers of their services. More than 50% of this debt was owed to the metros. A total of R25.4 billion was owed to the six metros. The City of Johannesburg accounted for the largest proportion of the debt owed to municipalities. The metro was owed R9.6 billion, followed by the City of Ekurhuleni, which had R6.3 billion worth of outstanding consumer debt. The metro with the lowest amount of consumer debt was the Nelson Mandela Bay Metro with a R1.3 billion in debt.

The metros’ consumer debt total decreased by R2.8 billion from R28.2 billion in 2006 to R25.4 billion in 2007. The decrease was not due to debts being paid, but rather due to the cities of Ekurhuleni, Tshwane, and Johannesburg writing off some of their debt.

Consumer debt owed to all local municipalities increased by almost R3 billion from R14.9 billion in 2006 to R17.9 billion in 2007. This may have been due to the fact that local municipalities did not have the capacity to institute the same debt management strategies as the metros – such as evaluating cases of bad debt that should be written off.

According to the 2008 Local Government Budgets and Expenditure Review 2003/04–2009/10, published by the National Treasury, metros were owed almost 35% of their annual budgets, local municipalities were owed 39%, and district municipalities 11%.

Residents owed 60% of all consumer debt, while national and provincial government owed 20%, and businesses owed 20%. This trend was apparent across local, district, and metropolitan municipalities.

The inability of municipalities to manage their finances, and implement good credit control policies, is a hurdle to local municipalities in addressing service delivery backlogs, and combating poverty in their areas.

-Nthamaga Kgafela