Extended lockdown could see municipalities lose R14bn in revenue, warns Salga
Salga is warning that municipal revenue from rates could fall by 5% – an amount of about R14 billion – due to the lockdown.
CAPE TOWN – Municipalities, many of them already in dire financial straits, are now under even more pressure due to the impact of the COVID-19 crisis.
The South African Local Government Association (Salga) is warning that municipal revenue from rates could fall by 5% – an amount of about R14 billion – due to the lockdown.
Salga told Parliament’s select committee on appropriations on Wednesday that the longer the lockdown lasts, the higher the impact would be, as households struggled to make ends meet.
Municipalities are at the forefront of the response to the COVID-19 pandemic but are buckling under the pressure. About 34% of the country’s 257 municipalities ended the year with their books in the red.
Billions of rand are owing for water and electricity and Salga is worried that the COVID-19 pandemic and lockdown will see more municipalities falling into a debt trap.
“In terms of the preliminary numbers that have been submitted it is projected that there will be a five percent drop in the payment of rates, and it will cost municipalities about R14 billion,” said Salga’s chief officer for municipal finance, Khomotso Letsatsi.
Letsatsi said depending on how long the lockdown lasts, this number could increase.
“Economic activity could basically drop to around minus six percent and obviously, that would come with consequences for the sector and the financial sustainability of the sector,” Letsatsi said.
WATCH: COVID-19 Situation Desk - 13 May 2020 AM
For official information about COVID-19 from the Department of Health, please click here.