Urban councils in financial ruin
By Kenneth Matimaire
Revenue collection by Zimbabwe’s urban councils dropped to 52 percent last year, from 60 percent the previous year, according to a World Bank-sponsored Service Level Benchmarking (SLB) annual report released a fortnight ago.
Zimbabwe’s 32 urban town councils, registered under the Urban Councils Association of Zimbabwe (UCAZ), no longer run income generating projects and solely depend on bills for revenue.
While some urban councils have consolidated bills issued to ratepayers, others have separate ones for water (sewer and solid waste) and rates (supplementary charges and owners’ rates).
Water generates 60 percent of the revenue for most local authorities, although they are failing to account for an average of 40 percent of their water for the past five years mainly due to leakages, faulty metres and pipe bursts.
The country’s 32 urban councils have been losing a combined US$5,9 million per month over the past five years through non-revenue water (NRW), says a study titled: Challenges Faced by Local Authorities in Zimbabwe, which is part of the SLB report.
The study covered the period between 2012 and 2016 and describes NRW as water lost through unauthorised consumption, metering inaccuracies, overflows at storage tanks, leakages along distribution lines and on service connections right up to consumer meters.
Harare city council recorded the highest water losses, which cost the local authority approximately US$3,2 million per month followed by Bulawayo at US$640 000 and Kwekwe at US$470 000, the report said.
Harare city officials say as much as 65 percent of treated water is lost through leakages from its aged pipeline network, which is more than 60 years old.
The capital has a daily supply of 520 mega litres, against demand of nearly 800 mega litres.
Other urban councils’ NRW costs hovered between US$5 000 and US$260 000 during the period.
Chirundu and Lupane town councils were the only local authorities with a sound water supply system.
“If you talk in terms of the volumes of water lost, many do not see the gravity of this crisis, but if you talk in terms of money, because that is the language that local authorities understand, they immediately get the picture. So this was the purpose of this study and councils are losing millions of dollars through non-revenue water every month,” said Chinhoyi University of Technology professor, Innocent Nhapi, who conducted and presented the study.
This has resulted in mass shortage of potable water for urban dwellers, despite sufficient water reserves to supply residents.
The WB report attributed the decline in revenue collection to the economic environment affecting most ratepayers.
It further indicated that owing to the decline in revenue collection, urban councils have been unable to maintain roads, traffic lights, sewer and drainage systems as well as garbage collection, which has provided ratepayers with even more reasons to default on payments.
Though the WB report did not indicate the amount owed to local authorities, the Financial Gazette managed to get details of 12 out of the 32 urban councils that are owed US$943 million by ratepayers.
Harare and Bulawayo city councils, which top the list, are owed US$600 million and US$150 million, respectively, by ratepayers, according to senior authorities.
Chairperson of the directors of finance forum, Saratiere Chitenhe, said revenue collection by local authorities continues to decline.
He said revenue collection for water and rates in 2016 averaged 52 percent.
“But of late, if you compare with past years, you find out that the revenue collection efficiency is going down. Figures for 2014 and 2015 were around 60 percent,” he said.
Chitenhe attributed the revenue decline to the national economic crisis which had negatively affected ratepayers.
“The reason (for revenue decline) is the economic conditions affecting a lot of people (as well as) unemployment. A lot of people can no longer afford to pay their rates,” said Chitenhe, who is the finance director for Kariba Town Council.
He noted that although revenue collection levels were around 52 percent, some towns such as Ruwa had 80 percent revenue collection levels, while others such as Gwanda had revenue collection levels as low as 24 percent.
George Makunde, who chairs the SLB committee, said councils were failing to implement measures such as water disconnection and rates rebate as well as use of debt collectors to force ratepayers to settle their debts.
Makunde, however, said the efficiency of these methods had declined at an alarming rate.
“In terms of revenue collection efficiency results, there is a substantial decrease in collection efficiency. In 2012, we were at 53,6 percent collection efficiency on average, but now it is as low as 32,8 percent. This is unacceptable and very scary for the future of local authorities,” said Makunde, who is the Chitungwiza town clerk.
Analysts have suggested that ratepayers have been reluctant to settle their debts following the 2013 debt write-off ordered by government ahead of general elections that year.
Local authorities wrote off about US$2 billion owed by ratepayers as a result of the government directive.
With 2018 elections only a few months away, ratepayers could be hoping for a similar reprieve.
Bulawayo mayor, Martin Moyo, in an earlier interview with this newspaper, indicated that the 2013 debt write-off precipitated a financial crisis for councils.
“Obviously, those that were most delinquent and had not been paying were rewarded. So they could go on without paying in anticipation of another write-off. The good citizen who had been paying their dues diligently felt cheated and hence disgruntled and joined the band wagon,” Moyo explained.
He added that this resulted in the decline of revenue, leading to councils’ inability to offer sound service.
“Our core mandate, which is service delivery, is affected directly by the rate of collection. If collection is at the optimum, the quality of service delivery is high. The inverse is true in every respect. The money owed is just what we need to work on the bad roads, refurbish infrastructure and improve the quality of water we drink and to dispose of our effluent efficiently,” he lamented.
Chitenhe said government was exploring ways of compensating councils for the 2013 debt cancellation.
“We have got the assurance from the Ministry (of Local Government) that there will not be a repeat of that. As we speak they are trying to come up with modalities on how they can compensate councils over that write-off. So to us we have discussed with the ministry and they said it won’t happen,” he said. Financial Gazette