Buffalo City Metro owed billions by the wealthy

These businesses have been in arrears for months, some years

Buffalo City Metro is owed billions of rand for services, and some of the biggest debtors include local millionaires, stateowned enterprises, and several of the city’s biggest businesses.

A report, leaked to the Daily Dispatch, has revealed that of the R3.8bn owed, there are debtors who owe the metro close to R10m each.

They include huge industrial developments, malls, one of the country’s largest fruit producers, government financial institutions and property developers who rent out low-cost subsidised housing.

Several entities are months and even years behind in their payments, and the amounts owed increase by the day.

The list reads like a who s who of top companies, stateoperated or funded entities and high net-worth individuals, including developers who rent property to the metro itself.

The amount excludes R500m in indigent debts written off by BCM earlier this year.

In January, the Daily Dispatch reported that the city was to write off huge swathes of debt in an incentive scheme to reduce the colossal financial burden being borne by the city and its ratepayers.

At the time, BCM spokesperson Samkelo Ngwenya said: “Residents who owe the most will qualify as the debt scheme is open to all customers.

“This is except for government accounts which have arrears in the ageing category of 120 days and older as at December 31 and whose accounts are still in arrears at the date of registering for the scheme.”

The plan was seen as a response to the economic hardship caused by lockdowns and business restrictions as a result of the Covid-19 pandemic.

But, the mountain of debt has continued to grow, with the metro owed more than R2bn as of last January, with much of that figure due from the city’s largest economic partners and employers.

According to a response to questions seen by the Dispatch, as of December 2019 the debt owed by domestic and business consumers totalled R1.8bn excluding current debt, of which R440m was owed by business debtors. By July 2021, that amount had ballooned to an eye-watering R3.8bn. This was confirmed by Ngwenya.

The July collection rate was 45.72%, a far cry short of the 83% the council had budgeted for. This was listed ’as an implication on the city s finances of Covid-19 restrictions.

A total of 269 business consumers owe BCM and only 10 have made arrangements to service their debt. The city also names meter tampering as a challenge to credit control and debt collection.

“Debt collection through attorneys is a lengthy one due to the time frames and necessary steps imposed by the courts, but will yield results over the long term,” the report states.

DA councillor Jason Mcdowell said the report painted a worrying picture of the state of the metro’s finances.

“The report tells us there is a very big problem ... Small wonder our collection rate is not as it should be.

“Some of the amounts listed make one wonder if the billing was correct in the first place. If it was wrong, it is not surprising that customers are not paying.

“If this lands in court we will have to establish the accuracy of the amounts. We have amounts handed over for individual domestic consumers in excess of R2m. The areas building up appear not to be proactively dealt with, because there are no arrangements in place.

“Are those consumers, at the very least, on a partial block so we can recover some of the outstanding balance?

“According to the report, there are no arrangements in place for almost all of those properties.

“Only 19 of 2,273 have arrangements in place — this is negligible and should be explained. On page 244 of this report there is a domestic consumer owing some R5.96m.

“Some of these debts have increased by over 120 days, yet still no action is taken to curb escalating consumption.

“This report should not be withheld from council and should proceed to council for consideration of the responses,” he said.

The list reads like a who ’ s who of top companies, state-operated or funded entities, and high net-worth individuals