24 November 2012

Zimbabwe: Balancing Council Viability and Welfare of Residents


All local authorities in Zimbabwe, urban and rural, rely on rates or taxes from residents in their area for the bulk of their funds to provide basic services such as health, road repairs and maintenance

and education. In some places urban councils tend to go further and also sell treated water, dispose of sewage and collect garbage, for which they charge special rates.

Problems of viability and fairness arise when some residents do not pay. Councils cannot provide services if they do not have the money, and some of these services are essential, and it is unfair that those who do pay support those who do not.

Many councils thus hire debt collectors, or perform similar functions with their own staff, and if residents still do not pay after the normal warnings they seize and auction property. But that also produces problems.

Second-hand goods in Zimbabwe are not valuable; auctioned items usually sell for a tiny fraction of their replacement cost. So it is quite possible for a bad payer to lose all their moveable property and still owe vast sums.

The law limits what can be seized in urban areas. Generally basic kitchen and bedroom furniture has to be left in place and, critically, tools of a person's trade cannot be seized. But in any case urban councils rarely move down to this level of seizing property. If they rarely want to apply pressure they simply cut water supplies, which almost always produces the defaulting resident in a council office and then arrangements can be made.

Most councils are prepared to consider payment plans for arrears, and will only move on to further action if the resident does not either keep to the plan or renegotiate it.

Once the resident and a council official are communicating then usually something can be worked out.

But rural councils are in a bind. They tend to offer services to a whole community, rather than an individual. It is difficult to cut off access to a clinic or a road to just one person. And it is in the general nature of defaulters that they do not go to the council office voluntarily to negotiate a deal and a payment plan.

In fact, they tend to do their level best to avoid all council officials all the time. Rural councils also face the problem that most rural incomes are intermittent, especially among farmers, who form the bulk of ratepayers. Payment plans are difficult to draw up when no one has the faintest idea how much income a person will have over the next year.

Most of the property seizures thus occur in rural areas. If this was just things like televisions, this would not be criticised.

Unfortunately, the average rural person does not have a lot of valuable household goods; their main moveable assets are the machinery, from small ploughs and scotch carts upwards, or livestock. They need these to produce their incomes.

So the action by Local Government, Rural and Urban Development Minister Ignatius Chombo to ban councils from seizing property is not irrational. It does stop poor families sinking into total poverty with no hope of ever getting out. But it is only half the needed policy. Somewhere along the line the council needs to get its money.

We would like to see several approaches examined. Urban councils, if all else fails, should be able to get easily and cheaply garnishee orders on the paychecks or other income of most of their defaulters. This avoids massive asset loss through auctioning goods for a song and ensures that the money does eventually turn up. A civil magistrate, even processing a large number of cases a day, can at least ensure that the orders are outwardly fair.

Rural councils probably need some way of grabbing a percentage of what their residents get when they sell crops or livestock.

This is fine if they are hunting a tobacco farmer, who must be paid through a bank. They should be able to get a simple order that makes the bank pay the council, say 10 percent of the tobacco receipts, until the debt is cleared.

But such a system is not going to work so easily when dealing with a person selling on the parallel market where bookkeeping is minimal and all payments are untraceable cash. But we think imaginative officials could create a system whereby a council could seize a fixed percentage of a harvest as it is reaped, or a percentage of a cattle herd or some similar system.

This would have a similar effect to a garnishee order, leaving the resident with the bulk of their income and all their assets but still paying off a debt.

Hopefully councils would never have to go this far if there was some way they could get their money without total hardship for defaulters. Starting the process should encourage defaulters to do what they should do in the first place, visit their council offices, discuss the problem and then work out a fair and realistic payment plan.

Minister Chombo's suggestions of using community trust income and the like could help reduce the burden. But generally these sources of income must be earmarked for capital expenditure, not running costs. It would be sensible to use trust income to build a new bridge, but taxes have to be used to keep it in repair.

Rates could be lower and so more affordable but would not go away. We hope the minister's action will start what is needed, a proper debate on how councils can be viable without condemning residents to total and permanent poverty.

And this means that they need to look at how they can get their money out of income, just as the central Government does with its income taxes, rather than by seizing and selling assets that are usually vital for a family's livelihood.

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