City in N$209m debt trap

THE City of Windhoek is N$209 million in the red and has called on residents to settle their outstanding debts.

The City’s spokesperson, Liz Sibindi, confirmed this week that the municipality had been battling to get out of the debt trap for some time, because ratepayers were not paying for services rendered. Although the situation was “not as precarious as it may seem, as the outstanding debt constitutes less than the equivalent of three months”, she said, the amount had been outstanding for some time.”The City has for the last three years, due to the implementation of a new credit-control policy and more intensive collection efforts, not accumulated any new debt and has been slowly but surely reducing the outstanding balance,” Sibindi said.The financial quagmire has been worsened by the high rate of migration to the City.Earlier this year, Dr Bjoern von Finckenstein, Chairman of the City Council’s Management Committee, said Windhoek faced a four per cent population growth but this was not matched by equivalent income growth.Unless this migration was reversed by making it more attractive for people to stay in rural areas, the trend threatened to eventually suffocate the City, he warned.He said urbanisation was a national issue and needed to be addressed at the highest level.”While the City presently is still able to cope with this challenge, a time will come where it is in no position to handle this any more.While this is an infrastructural and financial challenge, it is also a planning challenge.It is impossible to plan for something where no exact figures exist,” he said.Von Finckenstein said the majority of migrants were unable to pay for services, placing an increasingly heavy strain on the municipality.The unemployment rate in Windhoek is believed to range between 35 per cent and 40 per cent.Sibindi said it would be far fetched to conclude that bankruptcy was imminent, but admitted that the City was grappling with a financial challenge.”The City is committed to provide services at a cost and reaffirm enforcement and implementation of our credit-control policy in this regard,” she said.She said some ratepayers had diligently paid for services over the last three years, thereby ensuring that there was no further increase in the debt.”But at the same time we wish to call on them to appreciate that the City of Windhoek has a mandate to deliver services which need to be paid for,” she said.The City resolved earlier to convince the Government to divert some of the income from taxes collected in the capital to the City Council.Although the situation was “not as precarious as it may seem, as the outstanding debt constitutes less than the equivalent of three months”, she said, the amount had been outstanding for some time.”The City has for the last three years, due to the implementation of a new credit-control policy and more intensive collection efforts, not accumulated any new debt and has been slowly but surely reducing the outstanding balance,” Sibindi said.The financial quagmire has been worsened by the high rate of migration to the City.Earlier this year, Dr Bjoern von Finckenstein, Chairman of the City Council’s Management Committee, said Windhoek faced a four per cent population growth but this was not matched by equivalent income growth.Unless this migration was reversed by making it more attractive for people to stay in rural areas, the trend threatened to eventually suffocate the City, he warned. He said urbanisation was a national issue and needed to be addressed at the highest level.”While the City presently is still able to cope with this challenge, a time will come where it is in no position to handle this any more.While this is an infrastructural and financial challenge, it is also a planning challenge.It is impossible to plan for something where no exact figures exist,” he said.Von Finckenstein said the majority of migrants were unable to pay for services, placing an increasingly heavy strain on the municipality.The unemployment rate in Windhoek is believed to range between 35 per cent and 40 per cent.Sibindi said it would be far fetched to conclude that bankruptcy was imminent, but admitted that the City was grappling with a financial challenge.”The City is committed to provide services at a cost and reaffirm enforcement and implementation of our credit-control policy in this regard,” she said.She said some ratepayers had diligently paid for services over the last three years, thereby ensuring that there was no further increase in the debt.”But at the same time we wish to call on them to appreciate that the City of Windhoek has a mandate to deliver services which need to be paid for,” she said.The City resolved earlier to convince the Government to divert some of the income from taxes collected in the capital to the City Council.