In 2005 dplg, FNB Public Sector Banking (FNB) and Public Services & Utilities International (PSU) entered into a Memorandum of Understanding (MOU) to provide an initial analysis of the state of revenue for the Project Consolidate pilot sites in order to highlight problem areas wiøth their billing data and pinpointed areas where revenue enhancement programs should be introduced. The focus of the private sector partners was targeted at providing assistance in the area of billing and revenue enhancement. Mafikeng Municipality is one of the Project Consolidate pilot sites.
Dr J S Moroka Local Municipality is situated in Mpumalanga, north east of Tshwane and is located within the Nkangala District Municipality. The population is estimated at 243 330, or 54,500 households, living in 70 villages. This is a rural municipality with a mixed water services delivery network: water is typically provided daily to remote communities and schools by means of water tankers while formalised R293 towns and surrounding communities enjoy reticulated water. According to the 2001 Census, 85% of the households live in formalised dwellings and the average household size is 4.5. More than 50% of households have access to water services through a yard or house connection. 67% of households were reported to earn less than R800 per month and just over 80% of households earned less than R1600 per month.
Siyabuswa is a former R293 town with Ga-Phaahla immediately adjacent to it – a village in the former trust area of Kwandebele. Siyabuswa has a formal layout of about 9,000 stands and Ga-Phaahla is informally planned with 1,700 stands and both constitute about 20% of the municipal area. In 2004, the municipality faced a consumer debt of about R36-million some of which dated back several years. At the time residents were billed at a flat rate for water services while consumers preferred being billed for actual usage. Council accepted this challenge by implementing the Premier’s Special project which entailed the installation of water meters in selected areas. Following this project, all meters had to be activated on the billing system and a separate initiative was approved by Council in 2004 which comprised a customer registration process as well as meter audits in Siyabuswa and Ga-Phaahla, in order to move away from flat-rate billing to consumption billing to improve the payment rate of the municipality. Several constraints hampered the completion of the implementation of consumption billing, notably the poor quality of the data already on the system.
At that time, Project Consolidate was announced nationally for which a number of pilot sites had been identified across the nine provinces. Dr JS Moroka municipality was the only pilot site in Mpumalanga and, understandably, did a lot of preparatory work during 2005 which finally resulted in the approval of a water consumption billing project. Municipal efforts were further supported by the billing service delivery facilitator (SDF) deployed by dplg in the municipality. The way in which Council accepted this support and integrated Ms Eda Visser into the management structure provided further impetus for their achievement of the project objectives.
The project focused initially on two areas to coincide with the previous work done under the Premier’s Special project and the MIIU-funded meter activation project with the understanding that this would pave the way for the rollout of consumption billing into other areas once the first phase had been completed. The billing project, as it became known, comprised extensive data cleaning on the billing system and preparing the billing system for consumption billing. In order to ensure the successful rollout of the new billing, a number of complementary projects were necessary such as water conservation initiatives, a new arrear payment system to encourage future payments from consumers, targeted credit control on business and government accounts, an extensive indigent registration process and an improvement in waste management services.
Various service providers who shared the same vision we employed to implement the municipality’s projects. PSU International assisted in the implementation of the billing project. The employed eight local people for 10 months; trained them in the art of meter reading and meter management and deployed and supervised them for a six-month period while introducing and entrenching consumption billing processes and procedures. The billing system vendor (Munsoft) was also engaged in the process to ensure that the billing system was correctly setup. A non-negotiable component of the implementation of this project was the registration and approval of indigent consumers. Deloitte had assisted the municipality in crafting a credit control and indigent policy which was approved by Council just days before the indigent registration process commenced.
Apart from professional assistance, a considerable amount of support was given to the various projects from Council. The Mayor had several opportunities on radio to explain the rationale of the various initiatives. Councillors were taken on board through regular feedback sessions and became so familiar with the projects that they continually asked for an update on progress. Communication material was carefully designed and distributed at intervals to consumers to inform them of the pending changes and the process that would be followed prior to implementation of the new billing system.
What was the final result? The clean customer database was compiled by doing a house-to-house survey using local people (in excess of 25 local field workers were utilised in various functions) who were trained on how to conduct the survey. This was started in 2004 and completed during 2006. The benefits of doing it in this way were that local unemployed people got a chance to earn money and gain some skills; 2,000 new customers were put onto the database and about 8,000 consumer records were checked and corrected on the billing system; indigent registration was part of the process and about 20% of households were approved as indigent which resulted in the write-off of approximately R8million in the 2006/7 FY. The indigent verification process was done in accordance with Council policy which involved Councillors, ward committee members, community development workers (CDWs) and other leaders. All eight meter readers were absorbed into the municipal organisational structure based on the initiation and participation of the HR department in the entire recruitment process. These staff members are multi-skilled in that they the experience to expand the customer registration process to other areas where customer verification is required; they are conversant with the billing system and manage their own work with minimal supervision.
Consumption billing was finally implemented from 1 October 2006. The first bills were distributed at the beginning of November after the highest consumers (600 in total) were notified in writing during preceding months of their exceptional consumptions and to encourage water conservation through managed water usage and general upkeep of internal plumbing. Dr JS Moroka has, therefore, proven that even a very rural municipality can move away from the flat-rate water billing to providing consumption billing thus improving the municipality’s financial viability. Billing has increased from about R500,000 in 2004 to close to R1-million per month at the end of 2006 and the percentage payment increased to a high of 54% compared to a 12% payment rate in 2004. An investment (project cost) of about R2,3 million over 3 years, effective strategic management by Council, the active involvement of ward councillors and sufficient time for planning and implementation were the key ingredients that made the recipe for success.