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plunge into crisis
Mandla Tshuma, The Financial Gazette
August 29, 2013
issued by the government last month ordering municipalities to cancel
all debts owed by residents backdating to February 2009 has thrown
local authorities into financial turmoil.
In the case of the capital city, council employees have not received
their salaries for last month because revenue has literally dried
In the second
city, the Bulawayo City Council has missed this month’s deadline
for the payment of salaries for its workers after the cash-flow
situation worsened in the aftermath of the government directive.
follows a more or less similar pattern in other major towns and
cities such as Mutare, Chitungwiza, Masvingo and Gweru where operations,
just like in Bulawayo and Harare, are wholly funded by residents
in the wake of donor fatigue.
are that service delivery could worsen because morale among council
employees throughout the country has slumped to its lowest ebb due
to the city fathers’ failure to pay their monthly salaries
and improve their working conditions.
interviewed by The Financial Gazette said even those residents who
used to honour their dues religiously have since stopped doing so,
hoping that the government would continue with its generosity since
the operating environment continues to be tough for ordinary Zimbabweans.
This has given
rise to a serious cash-flow crisis in all councils. As a result,
local authorities are now defaulting on critical payments, including
government ordered councils to write off debts owed by individual
ratepayers from February 2009 - when the country’s economy
was formally dollarised - to June 30, 2013.
In his directive,
outgoing Local Government, Rural and Urban Development Minister
Ignatius Chombo said it has become apparent that the country’s
tottering economy has not been operating optimally and in the process
relentlessly unleashing severe hardships on citizens.
from 2009, ratepayers have not been able to meet their obligations
in terms of payment of taxes, rentals, levies and related charges
resulting in an enormous and crippling debt burden frustrating the
majority of the population,” reads part of the directive.
the above circumstances, all local authorities are in terms of Section133
of the Rural District Council Act (Chapter 29:13) as read with Section
303 of the Urban
Councils Act (Chapter 29:15) directed to write off debts in
respect of rentals, unit tax, development levies, licences and refuse
charges owed by individuals ratepayers as at 30 June 2013. In the
same vein, money owed by residents for rates, stands prescribed
in terms of the Prescription Act (Chapter 8:13) as from February
2009 to 30 June 2013.”
the directive was meant to cushion individual ratepayers from the
severe effects of the economic challenges experienced during the
period in question.
At the time,
The Financial Gazette warned in its editorial that even after writing
off the debts, there was still no guarantee that residents would
be able to meet their future obligations no matter how reasonable
they might be unless the tripartite arrangement of labour, the private
sector and the government work tirelessly to improve the country’s
In order to
provide service, councils rely on various service providers to supply
them with chemicals to purify water, spares etc. There are also
banks that provide funding for their operations. These suppliers
and banks need to get paid or have the loans serviced to remain
in business and that payment can only come from the councils’
ability to collect whatever they are owed by residents.
picking up the tab in the form of inheriting the debts, The Financial
Gazette said the move would lead to the collapse of suppliers and
banks that are exposed to these municipalities while compromising
service delivery and exposing residents to health hazards.
government has every reason to sympathise with residents and help
them out in these difficult economic times, it must not reward defaulters
and encourage the dependency syndrome, which has destroyed the country’s
economy. By not giving to Caesar what belongs to Caesar, government
is leaving a trail of disaster in its wake: Just look at what has
happened to the once thriving public enterprises such as Air Zimbabwe,
the Zimbabwe United Passenger Company, the National Railways of
Zimbabwe, Cold Storage Company, TelOne and other parastatals that
are currently on the brink,” the paper warned.
This week, experts
said government should have first disbursed at least partial grants
or subsidies to municipalities before writing off the debts. Alternatively,
government should have first cleared its debts with local authorities
to ensure that they are not squeezed financially.
however, welcomed the debt write-offs. The debt cancelation, especially
of water bills, has also benefited mostly senior Zanu-PF officials
who owe rural and urban authorities’ substantial amounts from
their farming activities.
Before the directive,
Harare was owed over US$400 million by corporates and residents,
Bulawayo (US$100million) while Mutare was owed US$20 million. In
Masvingo, government owes council US$11 million while US$7 million
is owed by residents.
the general secretary of the Zimbabwe Urban Councils Workers’
Union, Moses Mahlangu, described the debt cancellation as something
not “worth smiling at”. Unless government bails out
municipalities, Mahlangu said the worst was yet to come for both
residents and councils.
is sympathetic towards the people, then it must look for money and
give local authorities grants,” said Mahlangu.
the people are rejoicing. What will happen soon is that local authorities
will fail to service their debts and banks will descend heavily
on them and residents will end up paying 10 times what they are
paying now,” he warned.
of the Bulawayo City Council Workers’ Union, Nkosiyabo Masuku,
said municipal workers feel short-changed by council’s inability
to dispense their salaries.
owes us some money and part of that money is what residents owe
to the council. As we speak, pay day is already overdue and we have
not been paid and the reasons are just obvious,” said Masuku.
said the union was not against the cancellation of debts since their
members were also residents, he argues that government should have
first compensated the local authorities to ensure service delivery
was not compromised.
He noted that
even those residents who had been faithfully paying their bills
immediately stopped soon after the announcement of the cancellation,
depriving council of the much-needed monthly revenue.
The outgoing Urban Councils Association of Zimbabwe president, Femias
Chakabuda, said the cancellation of debts had weakened municipalities’
balance sheets and subsequently their borrowing capacity.
He said service
delivery would decline as a result of councils’ failure to
pay their employees adding that it would have been better if government
had cleared its own debts before embarking on the move.
councils need to pay for their water treatment chemicals upfront,”
is that some individuals in high offices there in government owe
councils some money and just wanted to be pardoned together with
mayor, Lionel De Necker, said government’s directive was catastrophic
as it was encouraging people not to pay their bills.
is disastrous. It took years to build a small group of people that
paid their bills regularly and now a culture of not paying is being
brought back,” said De Necker.
Residents’ Trust director, Precious Shumba, said he does
not sympathise with the local authorities because they had allowed
corruption and extravagance to impose a heavy penalty on service
the majority of the citizens who owed the councils had already proven
beyond doubt that they had no capacity to pay the charged rates,
so in accounting, these debtors had already turned bad,” said
we in the HRT have celebrated debt cancellation is that the senior
managers in Harare are earning monthly salaries of US$18 500 for
the Town Clerk with the lowest paid director earning plus US$10
000, yet the lowest paid employee is getting around US$150. The
level of corruption and extravagance does not make us sympathise
with the local authorities as we genuinely believe that their insensitivity
towards residents on service delivery has become legendary.”
Progressive Residents Association coordinator, Rodrick Fayayo,
said notwithstanding the impact the move would have on service delivery
and council employees, a number of residents who were being overcharged
owing to the skewed billing system welcomed the move.
He said there was need for a forensic audit on the billing system
adding that there was need to incentivise those who have been paying
their bills so that they do not relent.
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