From an economics perspective, there are two types of goods in this world: free goods and economic goods. On one hand, free goods are those that have zero opportunity cost, meaning it takes neither resource nor effort to produce them (e.g. oxygen).
While economic goods have an opportunity cost, meaning it takes effort as well as other resources to produce (e.g. electricity). There is a misconception of classifying economic goods as free goods because they’re often provided freely by the government.
There’s no free lunch, someone, somewhere, has paid for it. As the sphere of government closest to the people, municipalities are responsible for electricity delivery, water provision for household use, refuse removal and many other functions. It is important to note that municipalities provide some goods and services free of charge, while others are provided at a fee.
The payments municipalities receive from the different services they offer go a long way in assisting them to remain functional. In their quest to deliver services, municipalities prepare annual budgets which are financial plans for the year that show the forecasted expenditure and income. Municipal budgets are important because failure to plan may affect service delivery.
While these budgets are good and commendable, planning does not guarantee success, but it increases the odds of success. This is because even the best-laid plans of mice and men often go awry. Regardless of having approved budgets, service delivery has deteriorated in most municipalities. One big threat to municipal budgets – besides issues like corruption, political instability, etc. is low collection rates.
Historical data analysis on nonpayment trends indicate that non-payment of bills is a persistent problem facing municipalities for an extended period. When municipalities deliver services to residents, they incur expenses that constitute a leakage from the circular flow of income. To maintain a balance, residents are supposed to make timely payments for those services, thus injecting money back into the circular flow of income.
Although most municipalities have supplementary revenue sources, in most cases the cash obtained is not enough to cover the shortfalls leading to incapacitation and poor service delivery. Surely nonpayment of municipal bills seems to have been ingrained in different communities, thus becoming more of a culture, forcing municipalities to resort to legal action to collect revenue.
According to literature, the culture of nonpayment originated from mass civil disobedience during the apartheid which manifested through boycotting the payment of rates. The solution to this problem requires a more collaborative approach because culture is like the wind. Although it cannot be seen, its effects are visible and can be felt.
Time is therefore ripe for municipalities to adopt the bottom-up approach involving movements in dealing with the problem of non-payment and observing lessons drawn from saving cultures. In a saving culture, people spend after saving whereas in non-saving culture, people save after spending. Municipalities are commended for recognising some of their customers as indigent.
To bring a lasting solution to the problem of non-payment, municipalities should appreciate that the most significant change often comes through social movements, and there’s a need to learn and adopt how those initiators engage and mobilise the masses to institutionalise new societal norms.
Most social movements start small with fewer optimists who deliver few modest wins that are powerful enough to convince nonparticipants. This applies social pressure for people to comply for instance, “Failure to pay municipal bills affects all of us badly, Shame on you for not paying your bills!” In addition, movements are good for making people feel the urgency and moving them to create a lasting commitment to change.
By harnessing this as a strategy, municipalities tend to benefit more in terms of bill payments, especially in the long run. Of course, self-introspection on the part of municipalities is also important in preparing fertile ground for increased collections.
Many people feel that they are not getting value for their money and are not sure how their money is being spent in municipalities. This lack of transparency leads to a lack of trust, which, in turn, leads to nonpayment of bills.
Therefore, municipalities need to start building trust with their residents by bringing services closer to the residents through community outreach programmes, being transparent about their spending, and demonstrating that they are providing value for money. One way to build trust with residents is to involve them in the decision-making process.
Municipalities should consider creating committees comprising of residents who can provide input on municipal finances and service delivery. When residents feel that they have a say in how their money is being spent, they are more likely to pay their bills. Municipalities should invest heavily in customer education and stakeholder engagement.
• Mumvenge and Molekane are with the Ntiyiso Consulting Group