Due to escalating consumer debt, many of the affected municipalities have been struggling to meet their own payment obligations. Power utility Eskom says only 40% of customers in Soweto are paying for electricity.
Eskom states that while residents in the township claim they are willing to pay for electricity, their records say the opposite - Eskom proposed that prepaid meters needed to be installed in Soweto as the grid must be protected and revenue collected. The utility has told residents that they need to install prepaid meters or get cut off and remain in the dark. Soweto owes more than R4.5 billion.
Incorrect and inaccurate municipal billing systems pose an additional challenge to the local government system in South Africa. The communities in the various municipalities are unhappy with the sometimes incorrect and inaccurate municipal bills that are being issued. Consequently, public confidence in terms of the billing system is continuously dwindling, communities are unwilling to pay for the bills issued and as debt accumulated and the municipalities could not recover the debt to account for their overheads.
Research suggests that to improve the efficiency of the collection of service charges, the billing and collection systems must be decentralized, accessible to the consumer, matched with the income cycle and paying capacity of the consumer. The South African Government has embarked on incentive scheme initiatives to encourage the payment of municipal bills. The incentive schemes are aimed at individuals and businesses.
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