By Tichaona Sibanda
Dozens of local authorities, among them Harare and Bulawayo, face uncertainty as operations risk collapse under a mountain of debt.
Already there are fears that failure to inject cash to sustain the councils will see operations grind to a halt in the next two months. Last month the outgoing Local government minister, Ignatius Chombo, ordered local authorities to write-off residents’ outstanding utility debts.
Critics described it as a vote buying exercise for ZANU PF.
Circulars sent out to the country’s 92 local authorities ordered them to cancel debts owed by residents from February 2009 to the end of June 2013. Councils that have implemented this directive are now reeling under financial constraints as they have run out of funds.
All councils in the country depend on money paid by ratepayers. Economic analyst Bekithemba Mhlanga said: “The less money councils have means the less things they can spend it on.’
‘Some of the money that could have been used to be ploughed back into the provision of services will not be available.
‘So therefore in the absence of a solid and robust strategy of how that financial gap will be plugged, I will not be surprised if we go back to the days where rubbish goes uncollected and the repairs of burst pipes is not carried out, because funds for that won’t be there,’ Mhlanga said.
Mhlanga said that the debt cancellation decision was taken by ZANU PF believing that if they lost the election, the promise would no longer be their problem.
‘However it has now become ZANU PF’s headache. They must find that money to pluck the gap or alternatively they will have to go back to the residents and say we lied to you, you need to actually pay this money,’ Mhlanga added.
James Mushore, the chief executive officer of NMBZ Holdings waded into the controversy when he warned that the cancellation of domestic consumers’ debts may worsen the liquidity crisis.
Addressing an analyst briefing in the capital on Thursday, Mushore said while business accepts the outcome of the July 31st elections, the post election government faces a herculean task of sourcing long-term capital to stimulate economic growth.
“I think the stagnation in the economy and the liquidity problems are going to be exacerbated now with the cuts or cancellation in rates and bills. The suggestion of cancellation of other utility bills is certainly going to impact on liquidity going forward and obviously this affects everybody,” Mushore said.
Itai Dzamara, a political analyst, said Harare city council workers have not been paid their salaries this month owing to the cash crisis.
‘It’s going to be difficult for the council in Harare as they have debts with banks they had been servicing regularly owing to cash coming into their coffers.
‘But suddenly there is nothing coming in, not even money for salaries or cash to buy chemicals for water purification as well as fuel for refuse trucks. It’s going to be catastrophic,’ Dzamara said.
Our Bulawayo correspondent, Lionel Saungweme, said the situation was the same and that city, which has struggled with water supplies issues for decades, will be facing difficult times ahead. He confirmed that most residents in Bulawayo have just stopped paying any council bills, as they adopt a wait-and-see attitude following Chombo’s directive.
Figures released by the council on Thursday revealed that monthly revenue collections have gone down by almost 65 percent from about $6,9 million to around $2,4 million.
About 12,000 residents in the city have, according to council, not paid a single cent since dollarisation in 2009. Residents are seemingly unaware that bills accrued after 30th June are payable in full as they are not covered by the government directive.
‘I think it was a populist decision that was taken without looking at the implications it will bring to the councils. I think what they need to do is to acknowledge the mistake and quickly move in to rectify the situation before it implodes,’ Saungweme said. SW Radio Africa
