RUNDU – Urban and rural development minister Erastus Uutoni has ordered the Rundu Town Council to immediately terminate an agreement with Redforce Debt Management.
The company was contracted to collect debt owed by government institutions, businesses and residents at the town in unpaid water bills, rates and taxes. The cash-strapped council contracted the debt collector in an attempt to recover escalating debt which is now estimated to be over N$300 million.
However, the line minister said the local authority did not follow government procedure, which is to acquire approval from the ministry before appointing the firm.
Uutoni said the council did not consult his office regarding the agreement with the debt collector. “Officials want to take decisions on behalf of politicians, why is it like that? Not during my time. The Local Authority Act is clear, it says when you are entering into a joint venture with a private company, there should be an agreement and that agreement has to be approved by the minister and I did not approve,” he said during a meeting at the council chamber.
“The council or administrator in this case did not approve and I am supposed to take that agreement to the government attorney general for advice because it involves a lot of money,” he added.
Acting CEO Sam Nekaro informed the minister that the decision to get into an agreement with Redforce was taken by the suspended council prior to their suspension. “More than N$3 million was recovered from defaulters in the first two weeks,” Nekaro said.
All accounts that have defaulted on payments for three months and beyond were handed over for collection to Redforce Debt Management as from 1 September and all payments were to be paid directly to Rundu Town Council, while defaulters are liable for collection fees, calculated at 12%.
Rundu at the moment is crippled financially and is unable to deliver services effectively due to the poor financial state in which the council finds itself.
Last year, the council urged ratepayers to participate in an incentive programme which ran for nine months whereby interest from their debts would be waived, but few participated which led to council appointing a debt collector. The incentive programme, which was applicable to all types of municipal services or accounts, ran from November to June this year.
To date Rundu still has not appointed a substantive CEO after the interviews for the position of CEO were cancelled earlier this month.