Cash-strapped businesses and residents drowning in municipal debt have been thrown a lifeline — a new amnesty deal that could see half their overdue bills wiped out if they settle the balance within a year.
The arrears rate has steadily increased over the past year, climbing from 64.8% in July 2024 to 67.6% in July 2025.
Since June 2024, household debt has surged from R12bn to R16bn. Unpaid water bills alone account for R9bn.
The Nelson Mandela Bay municipality has launched a programme to write off 50% of debt on all residential and business accounts that are in arrears, offering much-needed breathing room.
The applications for the revenue enhancement programme opened on July 1 and will close on September 30.
It is open to residential, business and registered NPO accounts.
Applicants must pay 2.5% of the balance upfront, and the rest must be cleared within 12 months, in monthly instalments.
Those unable to meet the payment terms within the stipulated period would no longer qualify for the amnesty and their accounts would instead be handled through the municipality’s standard credit control procedures.
The programme has been initiated as a result of the crisis in which the metro finds itself, with two-thirds of Bay ratepayers in arrears.
With the mounting debt, the city’s debtors’ book is sitting at R18bn — closing in on the metro’s R21.58bn 2025/2026 budget.
Compounding the issue is the age of the debt, with 69.2% more than a year old.
The decline in revenue collection has hit municipal finances hard.
The collection rate dropped from 75.6% in June 2024 to 72.6% by June 2025, resulting in a R1.1bn revenue shortfall.
Referring to the new programme to help lessen the burden, budget and treasury political head Khanya Ngqisha said it was not a handout but a one-off deal designed to help residents recover.
“The council resolution applies to everyone, whether it is a business or private household, and if you are in arrears,” he said.
“Whether someone earns R100 or a million rand, a person must come and apply, and they will be considered.”
The council approved the programme in June.
“This was a political decision which started at the budget and treasury committee and was adopted by the council,” Ngqisha said.
“With the debt escalating to nearly the R21bn budget of the municipality, I foresaw that this was going to be a problem.
“Therefore, we had to make a political decision.”
It does not extend to government entities, municipal employees and councillors.
As of June, the government owed the metro R23.5m while metro departments owed R1m.
Ngqisha said some residents owed about R1m — a situation that should never have been allowed.
“This is a lifeline, and those people must thank us because this was a political decision deliberately taken to benefit residents,” he said.
“The programme also brings relief to hundreds of small businesses, particularly in township and peri-urban areas, which form the backbone of the local economy but have been crippled by municipal debt.
“This programme is more than just a financial intervention.
“It is an opportunity to rebuild trust between the municipality and its people.”
Debtor management and suspension of services manager Joel Swartz said the lower-value property segment was hardest hit and that revenue collection in the municipality faced several challenges.
These included a decrease in the number of assistance to the poor (ATTP) re-registrations and access to municipal meters.
“Access to our meters remains a problem, as well as non-responsive customers,” Swartz said.
“Many residents are tampering with electricity, and that has directly had an effect on the financial sustainability of the institution.
“The rapid debt increase of the debt book was also due to the punitive water tariffs, an unintended consequence of the drought period we were in, and that led to lingering debt in our books ...”
For the 2024/2025 financial year, the council opted to remove the punitive Part C water tariffs after the relaxation of the drought regulations.
To apply, households must submit a copy of their ID, a payslip, and three months’ bank statements.
Business account holders must provide a letter of authority, the ID of the authorised person handling the financial arrangement, a one-month bank statement, and their latest audited financial statements.
“It is a requirement of our credit control credit policy for specific financial information to be provided by a customer that concludes an arrangement,” Swartz said.
The Herald