Walvis residents stuck in vicious municipal debt cycle
A payment system reportedly used by the Walvis Bay municipality has allegedly created a debt loop that keeps residents locked in a cycle of arrears and extra charges – even when they are making regular payments.The municipality contracted RedForce, a private debt collection company, to recover unpaid accounts older than 60 days. RedForce receives a 12% commission on every amount collected. Although residents pay the municipality directly, a portion of each payment goes to RedForce under this agreement.
The issue reportedly lies in how the municipality allocates payments.
Instead of using payments to settle the current month’s bill, the system first applies them to the oldest unpaid debt, starting with previous months’ water, rates and refuse.
That means the current bill remains unpaid, moves into arrears and joins the debt pool for future payments. With each cycle, RedForce reportedly collects 12% again.
For example, a resident who owes N$3 000 in old debt and receives a current monthly bill of N$700 decides to pay N$800.
Under the existing policy, that N$800 is reportedly used to pay part of the old water charges, not the current bill.
RedForce immediately takes N$96 as commission (12% of N$800) while the current N$700 bill remains unpaid and is added to the debt total the following month.
Even if the resident continues to pay every month, they never catch up – because each payment is applied to old debt and not the current bill while the 12% fee is repeatedly deducted.
Always in the red
A source familiar with the process said this means many accounts remain permanently in RedForce’s hands.
“Even when you’re trying to pay for this month’s water, it’s treated as old debt and RedForce gets their cut. That keeps your account in arrears. It’s like a built-in system that keeps you from ever catching up,” the source claimed.
The source warned that this system particularly affects low-income residents who can only afford partial payments. It penalises those who are trying to pay but cannot settle their full outstanding balance in one go. Over time, it transforms the 12% commission into a permanent surcharge on basic services, the source noted.
Questions have been raised about whether this was ever the policy’s intention.
The source asked why current bills cannot be ring-fenced from old debts so that people can at least stay up to date with ongoing services like water and refuse collection. They also questioned whether any assessment had been done to measure the impact on vulnerable households and whether the municipality’s model aligns with national laws on consumer protection and access to essential services.
Credit control policy
The source said the municipality should urgently consider reforms that allow people to exit the debt loop.
“You can’t penalise people for trying to pay. If the system turns every effort into a commission, then it’s not serving the public – it’s keeping people stuck,” the source argued.
According to RedForce, accounts handed over for collection will remain with the company until fully settled.
Residents have been advised to cooperate with the debt collection process, with the company stating that all collection actions are carried out in line with the Walvis Bay’ municipality’s credit control policy.
Network Media Hub reached out to both the municipality and RedForce with questions by phone, email,and WhatsApp, including follow-up reminders. No response was received by the time of going to press.
The issue reportedly lies in how the municipality allocates payments.
Instead of using payments to settle the current month’s bill, the system first applies them to the oldest unpaid debt, starting with previous months’ water, rates and refuse.
That means the current bill remains unpaid, moves into arrears and joins the debt pool for future payments. With each cycle, RedForce reportedly collects 12% again.
For example, a resident who owes N$3 000 in old debt and receives a current monthly bill of N$700 decides to pay N$800.
Under the existing policy, that N$800 is reportedly used to pay part of the old water charges, not the current bill.
RedForce immediately takes N$96 as commission (12% of N$800) while the current N$700 bill remains unpaid and is added to the debt total the following month.
Even if the resident continues to pay every month, they never catch up – because each payment is applied to old debt and not the current bill while the 12% fee is repeatedly deducted.
Always in the red
A source familiar with the process said this means many accounts remain permanently in RedForce’s hands.
“Even when you’re trying to pay for this month’s water, it’s treated as old debt and RedForce gets their cut. That keeps your account in arrears. It’s like a built-in system that keeps you from ever catching up,” the source claimed.
The source warned that this system particularly affects low-income residents who can only afford partial payments. It penalises those who are trying to pay but cannot settle their full outstanding balance in one go. Over time, it transforms the 12% commission into a permanent surcharge on basic services, the source noted.
Questions have been raised about whether this was ever the policy’s intention.
The source asked why current bills cannot be ring-fenced from old debts so that people can at least stay up to date with ongoing services like water and refuse collection. They also questioned whether any assessment had been done to measure the impact on vulnerable households and whether the municipality’s model aligns with national laws on consumer protection and access to essential services.
Credit control policy
The source said the municipality should urgently consider reforms that allow people to exit the debt loop.
“You can’t penalise people for trying to pay. If the system turns every effort into a commission, then it’s not serving the public – it’s keeping people stuck,” the source argued.
According to RedForce, accounts handed over for collection will remain with the company until fully settled.
Residents have been advised to cooperate with the debt collection process, with the company stating that all collection actions are carried out in line with the Walvis Bay’ municipality’s credit control policy.
Network Media Hub reached out to both the municipality and RedForce with questions by phone, email,and WhatsApp, including follow-up reminders. No response was received by the time of going to press.
Comments
Namibian Sun
No comments have been left on this article