The Newcastle Municipality continues to wrestle with severe financial challenges, with consumer debt significantly contributing to the local government’s crisis.
In a report by Newcastillian News in January 2024, it was revealed that, as of December 2023, Newcastle West was burdened with a staggering debt of R178,816,647.14, while Newcastle East owed an eye-watering R1,568,960,777.64.
These colossal figures paint a dire picture of the financial strain the Municipality is under.
At the time, the Municipality’s Communications Unit disclosed that the Department of Cooperative Governance and Traditional Affairs (COGTA) had intervened by appointing a service provider to assist with debt collection efforts in Newcastle East. Additionally, the Municipality stated that it was contemplating hiring a debt collector to bolster its collection efforts further.
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Now, seven months later, the pressing question remains: has there been any improvement in the Newcastle Municipality’s consumer debt? Are they making progress in their collection rates, or is the situation worsening?
Newcastillian News reached out to the Newcastle Municipality for an update, specifically requesting the latest figures for Newcastle West and East.
While the Municipality refrained from providing specific numbers, they emphasised the importance of analysing collection rate trends to gain a clearer understanding of their debt collection strategies and their impact on the Municipality’s cash flow.
“It is important to analyse collection trends rather than an analysis of outstanding debt, where the probability of non-recovery is high. Hence, effective collection methods can only be crafted after an analysis of the collection rate is performed,” explained the Communications Unit.
The collection trends per area and category over the past three years are detailed below:
Newcastle West:
| Category | June 2022 | June 2023 | June 2024 | Average |
| Business | 91.36% | 99.96% | 97.46% | 96.6% |
| Councillor | 95.08% | 98.10% | 96.42% | 95.65% |
| Employee | 97.14% | 98.81% | 98.76% | 97.94% |
| Farms | 96.99% | 107.01% | 98.47% | 100.83% |
| Government | 90.16% | 99.57% | 95.90% | 95.21% |
| Individuals | 88.80% | 89.41% | 88.90% | 89.04% |
Newcastle East:
| Category | June 2022 | June 2023 | June 2024 | Average |
| Business | 87.66% | 84.86% | 77.15% | 83.22 |
| Councillor | 97.32% | 92.60% | 113.95% | 101.29% |
| Employee | 91.52% | 90.55% | 104.38% | 95.48% |
| Farms | 85.30% | 83.55% | 77.56% | 82.14% |
| Government | 89.60% | 100.52% | 79.06% | 89.73% |
| Individuals | 18.84% | 14.81% | 16.37% | 16.67% |
Reflecting on these figures, the Municipality’s Communications Unit expressed deep concern, stating, “Our area of concern is the individual category in the Eastern Region, as the collection rate for all other categories is within acceptable norms.”
The repercussions for residents who fail to pay their outstanding debts are severe. “Firstly, the consequences for the West and the East are the same; our credit control and debt collection policy does not differentiate between the two,” explained the Communications Unit.
As per the municipality, the consequences of non-payment could lead to:
- Disconnection of electricity and/or restriction of water.
- Inability to obtain a rates clearance certificate, building plans, or tenders for consumers whose municipal accounts are in arrears.
Discussing the measures being taken to improve collection rates, the Communications Unit explained, “The Municipality is in the process of appointing a debt collector, with the main focus being individuals in the Eastern Region. The debt collector will then perform functions such as listing consumers as adverse payers on the credit bureau, issuing summonses, and sending letters of demand. The Municipality is not an accredited debt collector, so we are unable to carry out these functions in-house, hence the need to appoint a debt collector.”
It is worth noting that as early as January 2024, the Municipality had mentioned the possibility of appointing a debt collector, while COGTA had already deployed a service provider to assist with debt collection in Newcastle East. Yet, seven months later, the collection rates have not shown any significant improvement.
With this in mind, the Communications Unit underscored the severe impact non-payment could have on the community, stating, “The main consequence would be that the Municipality will be unable to provide basic services to the community, such as refuse collection, provision of clean drinking water, electricity, and basic sanitation services.”
As the Newcastle Municipality continues its relentless efforts to improve debt collection from residents, what are your thoughts on this ongoing issue? Share your views in the comment section below!
6 Responses
The truth of the matter people from newcastle east not all can’t afford rates there are many house holds that have more than 1 person working but yet they are not paying anything towards the serves they receive. The problem starts when politicians go to the residents to tell them it’s your right to have these services and then fail to further explain to the public that services are paid for they are not free. There is no place where you get services for free without someone having to pay for them you can go to any country services rendered are paid for. Politicians need to start telling the truth to residents than we will see a functioning Municipality because even the residents will value the services more because they’ll know they are paying and they’ll take care of the infrastructure because they’ll know if they don’t ensure it lasts they’ll have to pay.
The people who don’t pay and have access is what is causing us to have these extreme amounts of debt. Cut the damn people off if they don’t pay its not that difficult. You don’t go to the shop and say I’ll pay my bread over two months.
Now we that pay our bills religiously have to bear the brunt of what other cause. No one is entitled to get anything for free, we all have to work and support our own families.
It’s your own fault that yall started something and now you’re too scared to do something about it.
It’s not fair to make everyone suffer because the others don’t do their part. This is the only way we will get out of debt.
The Municipality must start by reviewing its salary structures. The ANC is responsible for that debt by borrowing millions and now the current Municipality must carry this burden. The town didn’t need to become a city. This inflated the salaries of the mayor and management. The town didn’t need a fancy building. This structure has put this town in this mess. Those responsible for this must be held accountable. In fact the ANC must carry this debt because of all their corruption.
Why are you not charging flat rate even if you have not finished erecting your water and sanitation facilities.
These are ANC voters
It’s not that people don’t want to pay for services. The problem is that municipality over charges e.g. how am I supposed to pay R1 900 excluding electricity on the pensioner’s salary ? The municipality must take payment from every household even if it was R200 it would make the difference. It’s unfair for municipality to overcharge paying residents 2 cover expenses of unpaying ones