Mafube municipality’s debt crisis: R1.5 billion owed, just 20% of bills collected

The Select Committee on Cooperative Governance and Public Administration, focusing on Traditional Affairs, Human Settlements, and Water and Sanitation, has expressed concern that the Mafube Local Municipality’s poor rates and taxes collection hampers its ability to achieve the goals of the Section 139 (5) (a) and (c) intervention mandated by the provincial executive.

“We are deeply concerned that the municipality only collects 20% of service charges, leaving 80% uncollected,” said committee chairperson Mxolisi Kaunda.

“Financial recovery plans that are not anchored on a strong revenue collection base are futile, as financial resources from services charges are the bedrock of municipal cash flow. It is on this basis that we are extremely worried that the municipality only collects up to 20% of services charges which means that 80% of services are not charged.”

Following their initial visit to Free State municipalities to evaluate provincial interventions, the committee noted President Cyril Ramaphosa’s pledge to review the municipal funding model.

Despite this, it urged Mafube Municipality to enhance billing and revenue collection within the current financial framework.

The committee raised alarm over the municipality’s outstanding debt exceeding R1.5 billion from government departments and local ratepayers.

It also called upon national and provincial authorities to settle these debts promptly to support struggling municipalities like Mafube.

“It is unacceptable that government departments contribute to cash-flow challenges in these municipalities by not paying for services rendered to them,” Kaunda said.

The committee welcomed the municipality’s intention to work on its indigent register to increase its knowledge of clients who are able to pay for services provided.

Meanwhile, the committee was shocked to discover that the municipality owes the South African Local Authorities Pension Fund and Municipal Workers Retirement Fund about R200 million.

The committee said this will deny municipal workers their retirement benefits on their retirement