The effectiveness of credit management policy implementation on residents' accounts in a Sedibeng district municipality

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Masungini, Abba Walker
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Vaal University of Technology
Municipal debt has been steadily rising year after year, jeopardizing the financial stability of many municipalities. There is a commonly overlooked provision within the Municipal Finance Management Act, section 64(2)(a), that states that the municipal manager must ensure that the municipality has a functional credit management and debt collection system. However, it is also the obligation of municipal residents to ensure that they pay rates and taxes for the services supplied to them in order to ensure the sustainability of service supply. Municipalities rely on revenue collection to ensure their survival and viability. Due to the importance of this sphere of government, this study investigates whether residents respond to the credit management policy of the municipality and whether it is implemented effectively. The study does so by looking at the relationship between credit management policy implementation and service delivery in the selected municipality in Sedibeng District. The study followed a quantitative research methodology, using self-administered hard copy questionnaires to collect data from 510 residents of municipality A of Sedibeng District municipality. Seven (7) different locations with the demographic of municipality A of Sedibeng District were selected to participate in the study, with a response rate of 100%. Data were statistically analysed through SPSS and testing included correlation analysis, factor analysis, frequency counting and ANOVA testing. The data collected revealed that there is a lack of credit management policy implementation and enforcement when it comes to non-payment of municipal outstanding accounts. According to the quantitative findings, residents have a negative attitude towards the credit management policy. However, the findings also showed that there are factors that influence responsiveness such as poverty, (un)employment and educational level. The findings also revealed a significant relationship between credit management policy and service delivery. Failure to pay municipal debts results in poor service delivery by municipalities. because they lack the financial stability necessary to provide a sustainable service supply. In turn, poor service delivery results in residents refusing to pay municipal debts because they are unwilling to pay for poor services. Recommendations such as continuous review of critical debt recovery policies, rebates and discount granted to residents, the introduction of advanced technical systems, quality service delivery, employee training and development and the like will assist municipalities to improve the effectiveness of their credit management policy implementation. The limitations to of study entails difficulty in obtaining municipal ethical clearance, because municipal officers are concerned about confidentiality. Furthermore, there were the COVID-19 regulations posed by the South African government to curb the spread of COVID-19 which also had an impact in collecting data from participants. The findings may not be generalised to a larger population of all South African municipalities.
MMA (Department Management Accounting, Faculty of Management Sciences), Vaal University of Technology.
Effectiveness, Credit management policy, Implementation, Service delivery, Sedibeng District, Legislative framework, Municipal credit management, Municipal revenue, Non-payment