Harare statutory debt balloons to $500m

By Andrew Kunambura

The Harare City Council (HCC)’s contribution arrears to several statutory bodies has risen by over 100 percent from $200 million to $500 million over the past two years, it has emerged.

Institutions owed include the tax collector Zimbabwe Revenue Authority (Zimra), the national pensions administrator National Social Security Authority (Nssa) and the Zimbabwe Development Fund, the Local Authorities Pension Fund (LAPF), Harare Municipal Medical Aid Society (HMMAS), Employment Council and the three workers’ unions that represent HCC’s employees.

As of June 30, 2016, council cowed Zimra $163,7 million, LAPF $43 million, HMMAS $1,4 million and Nssa $1 million, with the total amounting to $209,1 million.

Suppliers owed are Zesa; $113,4 million, trade creditors; $7,4 million, water chemicals; $5,3 million, dam levies; $1 million and plant rehabilitation; $600 000. The total for supply creditors is $128,7 million.

Harare mayor Bernard Manyenyeni confirmed the situation yesterday saying council was sitting on an actuarial time bomb.

He, however, could not give a breakdown of the specific amounts owed to the statutory bodies presently.

He blamed the 2013 debt cancellation move by government, saying it left councils grappling with high overheads, inter-parastatal debts, mal-administration and under-capitalisation; although cases of corruption and lack of good corporate governance which have negatively impacted on their operations are also contributing to the obtaining crisis.

Consequently, they have been unable to remit statutory contributions because of cash flow challenges.

“The actuarial liability of over $400m as of last year will have ballooned to over $500m by now,” said Manyenyeni.

“Why is it a bomb? That size of exposure equates to the debt write-off amount, almost. To pay it off at current collections of $12 million to $13 million per month requires 30 months of revenue.

“Our pensioners are wallowing in desperation; no benefits are being paid out to former employees and survivors of deceased employees.

“The LAPF has become a pyramid scheme largely due to decisions not being made nearly 2 decades ago and also due to the pension impact of high salary level,” he said.

The trend highlights the economic crisis gripping the country, forcing local authorities and companies to stop remitting statutory contributions to various funds.

The accumulation of pension arrears, for instance, raises the spectre of the growing number of workers and their dependents who will fail to receive their entitlements in the event of retirement or death.

These benefits can only be paid to beneficiaries whose contributions and premiums are up to date.

They deduct pension contributions from employees’ salaries and allegedly convert the funds to other uses.

The practice is also widespread in private companies, which are also failing to remit pension contributions deducted from workers as they try to juggle critical payments.

The failure by companies to remit pension contributions by workers has resulted in a number of pensioners facing delays in receiving their pensions.

Pension funds have also been blamed for not giving workers benefit statements on pension funds.

This means that members of pension funds can get the shock of their lives after contributing for many years only to get a few dollars which they were not expecting. Daily News