The City of Tshwane has appointed 34 companies to recoup more than R12bn owed by residents and businesses in the capital city.
These debt collection agencies were appointed on Monday on a three-year contract to collect all debt owed for 120 days or more.
A total of 93,113 residential and business debtors owe the city up to R12.8bn.
Tshwane spokesperson Selby Bokaba said the appointment of these companies will help increase revenue collection and improve the city’s cashflow. It will also help improve the city’s capacity to execute legal action against defaulters.
“The city has attempted to recover the outstanding debt through other less drastic measures such as credit control actions, debt calling and via electronic reminders, but all these efforts were in vain, and the city was left with no option but to outsource the recovery process," Bokaba said.
“People do not prioritise their municipal bill, hence we have had to take this action. We buy electricity from Eskom, we buy water from Rand Water. We have to pay these companies for their services.”
Companies which got the contracts were appointed on the basis of the number of jobs they would create, benefits to the local economy and appointment of locals.
Other conditions that were set by the city include:
- no commission would be paid should the agency collect less than 1.5% of the total debt book;
- the agency will collect arrear debt and inactive debt on a commission basis, calculated on the capital amount, plus interest on the outstanding amount from the handover date;
- the interest rate will be the one charged by the city to its consumers on overdue accounts as determined from time to time;
- on accounts where the debtors have paid the full outstanding amount before the agency has instituted the first collection action, regardless of when the account was handed over, the agency will not be entitled to the commission;
- no commission will be paid on direct debit payments concluded by the city;
- commission will only be paid on payments collected on the outstanding amounts on the accounts; and
- in instances where the full amount is not recovered, the agency will only be paid commission upon conclusion of a settlement plan.
Bokaba urged Tshwane residents to verify calls they receive from the agencies when they are in doubt about their authenticity.
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