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Buffalo City Metro (BCM) says it will be implementing its full credit control policy as the City is owed more than R4 billion rand in outstanding debt
Addressing a media briefing on Wednesday, Executive Mayor Xola Pakati, admitted that they were now facing a cash-flow problem.
He said BCM scaled back on its debt collection during the Covid19 hard lockdown, which had left many people unable to pay for services.
But, now he said the City had to raise its revenue collection from 71% in the last financial year, to the around 80% to enable the City to implement development projects.
"The pandemic has created a reality where the number of people who are unable to pay for services increased, and we had to relax the implementation of our credit control policy at that time due to the hard lockdown.
Pakati said despite this, BCM can service its long and short-term debt, which is why the City had "consistently maintained an A-credit rating from rating agencies."
"What we are experiencing now is a cash flow problem that is being managed through the implementation of cost-containment measures, expenditure management and enhanced revenue collection methods."
Pakati stressed though that BCM was able to meet its monthly salary obligations and purchased bulk water and electricity.
The mayor said households owe BCM R3.1 billion, businesses owe R1.3 billion, and provincial government departments owe R65.3 million, with the biggest defaulter being the Department of Public Works which owes R30.3 million.
The mayor said the Metro was left with no option, but to fully implement our credit control policy to recover what is owed and he's appealed to defaulters to come forward and make payment arrangements.
He also announced a Council resolution to offer consumers a huge discount for those in debt.
"This offer allows those that are prepared to settle their accounts to get up to 50 percent discount. There are also incentives for those who pay their current debt to be able to get into discount arrangements with the Municipality.
Details of this debt incentive scheme are available on BCM's social media platforms.
"We are confident that it will improve as we fully implement our credit control policy," Pakati said.
