12 JUNE 2013 CREDIT CONTROL AND INDIGENT MANAGEMENT

1. 12 JUNE 2013CREDIT CONTROLAND INDIGENT MANAGEMENT The Steve Tshwete Municipality Experience AMOS TWALA (AIMFO) ASSISTANT :DIRECTOR TREASURY IMFO MPUMALANGA CHAIRPERSON

2. Effectiveness creates profit, Efficiency maximises it. General Perception: • CFO only responsible for credit control • Totally distanced from other departments • Job of Juniors • Seniors only involved with prominent cases

3. BATHO PELE The deterioration of debtor payment goes hand in hand with poor customer care. Eight Batho Pele Principles: • Consultation • Service Standard • Access • Courtesy • Information • Openness and Transparency • Redress • Value for money

4. PERFORMANCE RESULTS OF THE STEVE TSHWETE MUNICIPALITY • Average payment rate • 2009/2010 100.04% • 2010/2011 100.04% • 2011/2012 101.29% Outstanding Consumer debtors >60 Days: • 2009/2010 R 16 518 229 • 2010/2011 R 22 745 853 • 2011/2010 R 26 209 820

5. PERFORMANCE RESULTS OF THE STEVE TSHWETE MUNICIPALITY • Outstanding debt: Total Annual Consumer levies:- • 2009/2010 7.5% • 2010/2011 5.74% • 2011/2012 5.02% • Monthly Debtors / days: • 2009/2010 27 Days • 2010/2011 20 Days • 2011/2012 18 Days

6. THE VARIOUS STAGES OF CREDIT CONTROL AT STEVE TSHWETE MUNICIPALITY 1994 • Middelburg Town Council amalgamated with Mhluzi Town Council (Formal Middelburg TLC) • Payment rate less than 10% in Mhluzi • Flat rate for electricity (including payment for water) • Prepaid electricity in Mhluzi and conventional in Middelburg • Prepaid operated by private contractor • Electricity distribution loss 79% • No meters were read 1996 • Uniform tariff structure for entire TLC • All meters cleaned – read monthly • Electricity distribution loss 9% • Payment rate +- 92%

7. THE VARIOUS STAGES OF CREDIT CONTROL AT STEVE TSHWETE MUNICIPALITY 2001 • Middelburg TLC combines with Hendrina (and Kwazamokuhle) TLC and parts of Middelburg TRC – Form Middelburg Local Municipality (became Steve Tshwete in 2004) • Payment rate less than 10% in Kwazamokuhle • Prepaid operated by private contractor – Loss paid by TLC from other sources at +- R 60 000 per month • Electricity distribution loss at 56% 2010 • Payment rate +/- 99% • Electricity distribution loss 9.73% • All meters cleaned, repaired and being read

8. DEBT MANAGEMENT IN A FIRM COMMUNITY PARTNERSHIP Community Municipal Council Community partnership • Service provision regulated by acceptable / supportive Policy and By-Laws • Service standards and consumer services • Credit control and debt collection • Control of Services • Indigent support and free basic services Municipal Administration

9. DEBT MANAGEMENT IN A FIRM COMMUNITY PARTNERSHIP • Services provision only by legitimate connections • No services provision without service agreement • Total process supported by delegated authority “ IT IS SURVIVAL NOT BRAVERY THAT MAKES A MAN TO CLIMB A THORN TREE ”

10. SERVICE CONSUMPTION MUST BE METERED. • All service connections must be metered • Meters suitable to application • Defects immediately reported • Meter replacement programme • Pre-paid electricity metering • Standardizing of meters • Regular audit of meters • Controlled on GIS • Units of un-metered service simple and understandable

11. READING OF METERS • Electronic Terminals (Route Master) • Monthly read at similar date • All meters read • Accessibility – deviations reported • Text messages (SMS) to consumers • Notes from the meter readers • Deviation keyed in on terminals • Immediately dealt with • Meter Reader Contractors • Checking defaults separate from readers

12. FIXED INTERNAL WORK SCHEDULE • Exact and comprehensive planning • Regular fixed dates / strict compliance • All work processes covered • Serve as guidance for all planning • Provide sufficient time for each process • Ensure all work covered and within limits • Rigid • Consistent

13. MONTHLY CONSUMER STATEMENTS • Combined Statement • Clear understanding lay-out • Reflect all transactions for the month • Reflect meter readings and consumption • Reflect all tariffs (even on sliding scales) • Include a last payment date • Contain a notice of service termination if not paid at due date • Contain clear and correct address (Obtain PAM Certificate – twice (2) per year) • Allow for a fourteen day payment period from delivery to final pay date • In the official communication language of the Municipality

14. PAYMENT FACILITIES • 12 Own pay points spread over municipality • Available to public – 60 hours per week • 3 ATM vending machines • Available 24 hours / 7 days • 6 Receptors at garages available 24 hours/7 days • A pay point within 4 km from any residential premises • 14 days payment period before due date • Credit card / Debit card facilities • Accept Electronic payments • Identity numbers for direct deposits • Accounts listed for bulk consumers • No pre-paid electricity sold if basic account not up to date

15. ACCOUNTS NOT PAID BY DUE DATE Payment extension subject to: • Sign acknowledgement of Debt / payment understanding • Regulated by delegated authority Prior warning arrangement: • Telephone call to responsible person • Text messages (SMS) to cell phones • Letters to larger consumers Termination of services • Private contractor • All on one day (early as possible) • Re-connection fees • Adjustment of deposit • Accountant on standby until 21:00

16. FIRST 14 DAYS: FINAL NOTICE • Service Termination without payment followed up • Restrict water meters • Disconnect at pole • Final Notices for: • Non-payment after termination • Services that can not be terminated • Transfer lessee debt to owners account • Arrange to attach lessee’s rent • Removal of tampered pre-payment meters • Penalty for electricity theft • Awards for information on illegal use

17. NEXT 30 DAYS: PERSONAL INTERACTION Difficult accounts handed to independent debt collector: • On percentage basis • Can not institute formal legal action • Must not disturb consumer relations • Can not collect payments Lists provided to Ward Councillors: • Interact with defaulters • Visit cases of payment resistance • Report findings • Report on needy cases

18. INDIGENT SUPPORT / FREE BASIC SERVICES • Formal enlistment • Only consumers of all four consumer services • Restricted to 20 ampere electricity demand • Can only revert back if account is up to date • Receive free basic services: • Assessment Rates 100% • 50 kWh electricity per month • 10 kl water per month • Free sewerage • Free refuse removal • Water restriction if consumption exceeds 15 kl per month • +/- 15500 indigents listed • Include child headed households

19. AFTER 60 DAYS: HAND OVER • Three different law firms appointed • Follow full debt collection process until attachment of property • Sale in execution of properties but only if: • Empty stands • Empty houses • Business premises • Attachment remain for period granted and immediate sale arrangement by sheriff: • When house becomes empty • Occupiers change

20. BAD DEBT IDENTIFICATION • Each step in debt collection process coded • Once identified irrecoverable, list for approved to write off • Prevent “dead wood” on debtors register • Delegations to CFO for all debt less than R2000, above R2000 item to council

21. HANDLING OF GOVERNMENTS ACCOUNTS THAT ARE ARREARS • A report of all government accounts that are in arrears is prepared by the Accountant income and forwarded to the provincial treasury and the national treasury department on monthly basis • Monthly engagements with identified officials on the payment of accounts • Regular meetings with officials from government departments

22. QUESTIONS

23. THANK YOU SIYABONGA