Councils risk ‘double payment’ in debt collection outsourcing – Sankwasa

Urban and rural development minister James Sankwasa has warned local authorities against duplicating debt collection functions, saying councils risk wasting scarce resources by maintaining internal units while outsourcing the same responsibilities to private companies.

Speaking to Namibian Sun last weekend, Sankwasa said the core issue is not debt collectors themselves but the flawed logic of paying both municipal staff and external firms to perform identical roles. He described this practice as inefficient and financially unsustainable.

“Local authorities have what is called a credit policy. They have debt collectors appointed and paid every month by the council,” he said.

“Now, if this job is taken away from the council and given to a private company, why do those people remain paid? What are they doing now?”

He stressed that outsourcing without restructuring internal systems results in “double payment”, further straining already cash-strapped municipalities.

“If someone else is doing debt collection while council staff are still being paid for the same function, that is duplication," the minister said.

"Yet the council doesn’t have money. So, are we achieving anything?” he asked.

Sankwasa added that where outsourcing is necessary, affected municipal employees should be absorbed into the private companies taking over those functions.

“Those staff members must be transferred, because what they were employed for is no longer being done by the local authority. That’s the logic, simple as that,” he said.

Poor in-house performances

The minister also questioned the competence of some internal staff, linking the issue to broader inefficiencies across the public sector.

“Poor performance is cutting across the whole public service, whether ministries or local authorities. There is poor service delivery in the country,” he said.

He attributed this to shortcomings in recruitment and workplace attitudes, calling for urgent reforms to improve performance across government institutions.

The clarification comes at a critical time, as local authorities across the country collectively owe billions to service providers. As of last year, NamWater said councils owed the utility a combined N$2.4 billion.

Similarly, Electricity Control Board CEO Robert Kahimise revealed during a media briefing that local authorities and state-owned enterprises in breach of repayment arrangements account for N$557 million owed to NamPower, bringing total arrears to nearly N$3 billion.

Amid weak internal revenue collection and a growing debt book, some local authorities have outsourced debt recovery to private collectors.

Debt collector Redforce has publicly revealed that it recovered more than N$1 billion for 10 local authorities between 2014 and 2024. However, last year Sankwasa directed all municipalities and town councils not to renew or enter into agreements with Redforce, citing economic and political concerns raised by residents in affected areas.

Tackling bad debt

As part of efforts by the central government to reduce mounting municipal debt, Sankwasa, during an induction workshop for councillors earlier this year, instructed local authorities to submit details of outstanding accounts belonging to pensioners and persons living with disabilities for possible write-offs.

The directive targets debts accumulated during the Covid-19 period, when government barred the disconnection of essential services such as water and electricity. Sankwasa emphasised that the intervention is limited to that timeframe, warning against any assumption that all municipal debt would be written off.

“When you keep bad debts on your books for 10 or 15 years, it reflects that your books are in bad shape,” he said.

“What we are addressing is the Covid period. Some of those account holders have even passed on, but their debts remain on the books. Who is going to pay it?”

He defended the policy, saying it was necessary to protect lives during a global crisis.

“The government gave a blanket directive. No water must be suspended, no electricity must be suspended. People were in a crisis, a worldwide crisis,” he said.

However, he acknowledged that the measure contributed to a sharp rise in unpaid municipal bills, as some residents who could afford to pay stopped doing so.

“Local authorities accumulated debts, even from those who could afford to pay but stopped because of that privilege,” he said.

Progress on implementing the write-off process has been uneven.

“I gave them a timeline of the end of March, but a lot of local authorities don’t have CEOs at the moment. That’s the situation I found,” Sankwasa said.

“Some have submitted, some are still submitting, but I’m waiting for the overall submissions so we can relieve some of these debts,” he said.