The decision by Minister of Urban and Rural Development James Sankwasa to cancel all RedForce contracts with local authorities has ignited a heated national debate. On one side, municipalities insist that external debt collectors are essential to keep their finances afloat. On the other, residents reject the very idea of private companies hounding them for overdue payments.
It is a messy situation, but one fact is undeniable: many residents of our towns are in arrears for municipal services, water, electricity, refuse collection, for a variety of reasons. Some are genuine hardships; others are simply a refusal to pay. The rule is simple and should be non-negotiable: if you use a service, you must pay for it. Yet enforcing that rule has become a political, financial, and moral battleground.
Why Are Internal Systems Failing?
The lingering question is this: if municipalities and government departments have their own revenue collection divisions, why are they failing to collect? The very existence of internal departments should mean that payment enforcement is handled in-house. Instead, these institutions outsource the task to private companies, who operate for one reason, profit. Debt collection agencies like RedForce are typically paid a percentage of the amounts they recover. That percentage is ultimately paid by the same debtors who already can’t afford their basic services.
The consequence is that the poorest citizens are now burdened with additional collection fees, pushing them even further into financial distress.
The Broken Disconnection–Reconnection Cycle
The real problem begins long before debt collectors arrive. Municipalities have been slow, or unwilling, to disconnect services the moment a payment is missed. Allowing non-payment to roll over month after month leads to debts so large they are almost impossible to repay.
Ironically, when services are finally disconnected, residents often scramble to make “payment arrangements” in order to get reconnected. These arrangements usually involve paying a percentage of the arrears as a downpayment, then committing to monthly instalments. But in many cases, the cycle simply restarts. Payments lapse again, the bill balloons, and the disconnection–reconnection merry-go-round spins on.
A secondary problem emerges: residents desperate to restore services often turn to microlenders for quick cash. These loans come with punishing interest rates, trapping people in a spiral of debt far worse than their original municipal arrears.
The Political Layer
Minister Sankwasa’s directive has been criticised as poorly explained, but it is clearly a political decision. Debt collection is a deeply unpopular process, and in an election-conscious environment, leaders will often side with the people over institutions. However, cancelling contracts without providing a workable alternative risks turning a politically popular move into a financially disastrous one.
What Could Work
This crisis requires a multi-pronged solution, one that balances the financial health of municipalities with the basic dignity of residents. Here are some practical steps worth considering:
Early Intervention, Not Endless Forbearance
Municipalities should implement automated early-warning systems. The moment a payment is missed, residents should be notified, via SMS, email, or in-person notices, that they have seven days to settle before disconnection. This is not cruelty; it is prevention. It is far easier to pay one month’s bill than to dig out from under six months’ worth.
For example, in Cape Town, the city sends immediate SMS alerts and offers payment plan sign-ups online within 48 hours of a missed payment, preventing small arrears from snowballing.
Tiered Disconnection Policies
Not all services should be cut off in the same way. For instance, a partial disconnection, reducing water flow to a trickle sufficient for basic needs, could be applied instead of a total shut-off. This keeps the incentive to pay while avoiding humanitarian crises.
In-House Professionalisation
If internal revenue departments are underperforming, municipalities must either retrain, re-staff, or restructure them. Outsourcing should be the last resort, not the default option. When outsourced, strict oversight must be built in to prevent exploitative practices.
The City of Windhoek once improved its collection rate by 23% in a single year by re-training staff, introducing mobile payment points, and conducting monthly debtor profiling without outsourcing.
Targeted Social Support
A blanket “no pay, no service” policy ignores the fact that some households are genuinely unable to pay. Municipalities should partner with social welfare departments to identify and assist these households, either through subsidies or debt relief, while holding able but unwilling defaulters accountable.
For example, in Botswana, indigent registers are used to exempt qualifying households from certain municipal charges, while aggressively pursuing payment from those who can afford it.
Digital Payment Options
Many residents fall into arrears simply because payment methods are inconvenient. Introducing mobile app payments, supermarket pay-points, and debit order options would reduce missed payments caused by logistical hurdles.
Public Education and Transparency
Municipalities should run continuous campaigns explaining where service charges go, how arrears affect the community, and what steps are taken before disconnection. People are more likely to comply when they understand the direct link between their payments and functioning services.
In the Erongo Region, a pilot programme that combined debt education workshops with transparent monthly expenditure reports boosted voluntary payment rates by 15%.
Debt Rehabilitation Programmes
Instead of relying on aggressive third-party collectors, municipalities could set up debt rehabilitation programmes that combine financial counselling with realistic repayment schedules, similar to credit amnesty programmes used in the private sector.
The Bottom Line
Minister James Sankwasa’s decision to end RedForce’s contracts may have scored political points, but without a clear alternative, the financial damage could be severe. Municipalities risk losing millions in revenue, further eroding service delivery, and ultimately punishing the same residents leaders are trying to protect.
The solution is neither full privatisation of collections nor blanket leniency toward defaulters. It lies in building strong, transparent, and responsive municipal collection systems that act early, treat genuine hardship with compassion, and hold chronic non-payers to account.
Because here’s the hard truth: a municipality that cannot collect payment for services will eventually become a municipality that cannot provide them. And when that happens, everyone, payer and non-payer alike, loses.
