WISA • CHAIR’S COMMENT
The cost of non-payment
Municipalities are under increasing pressure as users struggle to pay their bills. Without intervention, the situation could spell disaster for water supply in the future. By Dan Naidoo
T
he Covid-19 pandemic and resultant lockdown have had a severe impact on the South African economy. Many users can no longer pay their bills, and municipalities’ revenue streams face the prospect of drying up. The City of Cape Town recorded R900 million in outstanding rates and services payments in April alone – a one-third drop in income. A few months into lockdown, many of South Africa’s metros are reporting a drop in income that amounts to billions. The stark reality
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is that this non-payment, in a scenario already under serious financial pressure, could have a devastating effect on the general cash standing of municipalities. Service delivery, including the provision of water, is the cornerstone of all economies. Non-payment affects the entire value chain upstream, and if our five big metros are already reporting tough times, how can we expect the smaller, poorer municipalities to survive? We face a huge risk if there is no cash to sustain services.
Effects on water provision
The job of sustaining services that are critical to the national economy – such as water supply – will be very challenging going forward. Eskom is a perfect case study. Soweto’s R18.9 million in unpaid bills to the power utility (as at 30 June 2019) is an unfortunate example of what water utilities are likely to face. The corruption issue aside, Eskom is a very good utility, but it is crippled by the enormous outstanding debt from Dan Naidoo, municipalities. chair, WISA That is what
we are going to see happen with water if municipalities cannot afford to service their debt because their reliable base of paying users is eroded by the impact of the pandemic. It’s a vicious circle that will impact not only supply, but also investment in equipment, upgrades, maintenance, and preparation to meet growing future demand. How can you invest in major capital expenditure if revenue streams are starting to slow down? We are also faced with a scenario in which domestic water usage is increasing despite payments decreasing. Municipalities are then faced with a
