10 August 2017

Zimbabwe: Government Rules Out Another Debt Cancellation

Government has ruled out another debt cancellation for residents in all local authorities, arguing that councils lost more than half a billion dollars following the 2013 debt write-off.

The 2013 decision, Government said, crippled most councils and measures were being considered to help the affected local authorities. In 2013, Government ordered all 92 rural and urban councils to write-off debts owed by residents since February 2009 to June of that year.

This followed complaints by residents' associations over arrears caused by unjustified increases in rates and bills by the MDC-T-led councils, especially in urban areas.

Addressing delegates at the ongoing Local Government Investment Conference (LOGIC) underway in Harare on Monday, Finance and Economic Development Minister Patrick Chinamasa said Government was seeking practical ways to assist the affected local authorities.

He urged the local authorities to install pre-paid water meters to help boost revenue collection and to do away with unsustainable employment costs.

"The Ministry of Local Government, Public Works and National Housing has already submitted to us as Treasury a list of local authorities who incurred losses due to the cancellation of outstanding bills," said Minister Chinamasa.

"Let me say that this will never happen again.

"Can you believe it, the amount of losses that you (local authorities) incurred through that cancellation is half a billion. Where are we going to get that money.

"It puts a big hole into your finances, that we acknowledge. The matter is currently under consideration and we remain positive that we will find practical ways to assist the affected local authorities."

Minister Chinamasa said councils should address unsustainable cost structures, as there were situations in which councils' revenue was less than expenditure.

He urged local authorities to comply with the 70:30 percent threshold for service delivery against employment costs.

"You find a chief executive officer awarding himself and staff even higher wages, awarding councillors higher allowances, where do you expect that revenue to come from when you are not balancing the books," said Minister Chinamasa.

He said local authorities had limited capacity to collect revenue efficiently, saying there was no country which could give free water to everybody sustainably, without any payment to meet the cost of treating and distributing that water.

Minister Chinamasa said Government had instructed Zesa Holdings to have pre-paid meters to help revenue collection and councils should follow suit.

"I am happy that some two weeks ago, councillors from my constituency, Rusape Town Council, told me they were going to Plumtree," he said. "They did not brief me on why they went to Plumtree, but when I met the mayor and town clerk for Plumtree, I understood what it was about.

"Plumtree has installed pre-paid water meters and our councillors were going to see a good example of how revenue can be collected efficiently. "Plumtree should be smaller than Rusape, but it is leading by the example. We want all local authorities to follow.

"Local authorities should be able to meet the basic needs that we hold dear to our hearts.

"I consider it unethical for local authorities to deprive people of basic needs."

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