Non-payment of municipal bills is a serious issue that has a detrimental effect on everyone. While the reasons for non-payment of municipal bills in South Africa are complex and varied, many individuals and businesses simply do not pay municipal bills due to dissatisfaction with the quality of services provided. It is therefore important for municipalities to view their citizens as customers.

By Dan Naidoo, chairman, WISA

When state enterprises like water utilities and municipalities cannot sustain themselves, the taxpayer must bail them out. This significantly affects future investments and sets the sector and economy back. It also becomes increasingly difficult to maintain and build new water infrastructure, while we deal with the deficit of the past. New infrastructure like dams and treatment plants take years to plan and build. By failing to provide basic services, the most vulnerable citizens suffer, while others who can afford to pay for basic services will use alternatives like solar power and boreholes to have access to more consistent, better-quality services – ultimately resulting in even less payment to municipalities.

Another reason why municipalities are receiving less revenue is poorly managed tariff setting and consultation processes, that does not reflect the reality and needs of the economy and its citizens. Tariffs are supposed to include costs like maintenance, upgrades and new infrastructure, but most municipalities do not have a tariff model that takes these components into consideration. Some municipalities therefore price water based on influencing factors that are not directly linked to sustaining service delivery, as they believe that they can always access grant funding as a backup. However, grant funding should only be allocated for people who cannot pay for basic services. A big issue is the fact that there are often very few price increases for basic services during ‘election years.’

This incorrect pricing results in poor and inconsistent service delivery, which results in non-payment by citizens. It is a vicious cycle that seems to continue unless a long-term view is taken for infrastructure financing over the life of these types of assets.

Customers not just citizens

In commerce, there is a willing buyer and a willing seller; people pay for products or services that give them value. Businesses spend a lot of time and effort in engaging with their customers and ensuring that they are providing the correct product or service at the correct price. However, with many municipalities, there is often a lack of workable meters and consistent, timely billing systems and this results in inaccurate statements and discontented citizens. As discussed, municipalities often price their services incorrectly.

They also very seldom communicate with their citizens. If there is a complaint, there is a huge amount of bureaucracy to even file that complaint, let alone have it resolved. If municipalities provided a value statement to citizens with the correct, timely and accurate price, as well as a promise on delivering rapid, reliable services, there would be far less non-payment. Municipalities need to build trust with the people they serve, they need to lose any arrogance, bureaucracy, and stamp out all fraud and corruption. That is one of the ways to increase payment levels.

Without a public sector, there is no functional society, and the private sector cannot exist without infrastructure provided by the public sector. On the other side of the coin, the private sector invests and grows the economy for the municipality. There needs to be a mutually beneficial relationship between the two. If more municipalities can show their ratepayers a level of respect and appreciation – as customers and not just citizens – they would receive better support.

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