26 July 2018

Zimbabwe: Taking the Sting Out of Debt Collection

opinion

There is need for a holistic approach to how local authorities enforce debt recovery from ratepayers given the resistance from some residents to the engagement of debt collectors by the City Fathers.

Mr Speaker Sir, local authorities and other State institutions such as hospitals have found engagement of debt collectors an effective mechanism of recovering money owed to them while residents and patients view debt collectors as a thorn in their flesh.

Already, there have been reports that Chitungwiza Municipality has said its contract with Wellcash Debt Collectors remains in force despite calls by residents to have it terminated. The local authority engaged the company early this year after residents ignored the municipality's pleas to either settle their dues or come up with payment plans.

Town Clerk Dr George Makunde told The Herald this week that they could not reverse the engagement easily because of contractual obligations.

More importantly, Mr Speaker Sir, Chitungwiza finance director Mrs Evangelista Machona said Wellcash Debt Collectors remitted an average of $50 000 per month, a figure which ordinarily would not be achieved in the absence of the debt collecting firm.

There was also heated debate at Harare City Council last year on whether they should engage debt collectors or not although they eventually resolved to abandon the plans amid tension-filled discussion.

With respect to Harare, Mr Speaker Sir, what emerged was following the jettisoning of debt collectors revenue collection went down to about $12 million from $15 million per month.

There seems to be no doubt, Mr Speaker Sir, that the debate on whether debt collectors should be used or not is determined by which side of the coin one is looking at.

A service provider, such as council or hospital authority, views the use of debt collectors as the best available option given that the use of lawyers might be more expensive.

On the other hand, residents and patients resent debt collectors because of the attendant humiliation that might visit them.

At the same time, Mr Speaker Sir, it is not in dispute that all the controversy could have been avoided had residents either paid up or approached their council with a payment plan.

Residents, like most debtors, have a tendency of keeping quiet while the debt accrues, only to become livid as the service provider seeks to enforce payment through the use of such debt collectors or even litigation.

Mr Speaker Sir, it is needless to mention that times are hard for everyone as famlies have pressing financial obligations to meet such as school and hospital fees and therefore council rates might not be a priority.

There have also been complaints that residents are being asked to pay for non-existent services, like fixed water charges where water supply is non-existent.

That apprehension by residents, Mr Speaker Sir, is understandable.

What is required here, Mr Speaker Sir, is a holistic strategy on how debts should be recovered, or to be avoided at all.

Residents have often complained, sometimes unjustifiably, that there was no service when they were not paying after being treated at hospitals, with some giving false addresses. Ditto with services from local authorities.

It is the role of the Portfolio Committee on Local Government, Public Works and National Housing, Mr Speaker Sir, to assist in coming up with a solution and help both the residents and local authorities once the Ninth Parliament assumes duty.

These are some of the issues the coming Parliament must be seized with given the continued hostilities between residents and local authorities and other service providers on the engagement of debt collectors or how best payment for services rendered must be enforced.

Probably, Mr Speaker Sir, as a starting point, the portfolio committee might invite representatives of residents, local authorities and debt collectors to have an appreciation of their operations and come up with a win-win solution.

But what seems clear from what is unfolding now is that a service provider would prefer a debt collector in his bid to assert his right to demand what is due to him or her, given the aggression within which they pursue the debt.

On the other hand, customers, patients and residents alike, are livid at the engagement of such institutions.

It will be recalled, Mr Speaker Sir, that the engagement of debt collectors has in the past spilled into Parliament.

Either way, Mr Speaker Sir, a holistic approach is required to balance the desire by a service provider to get what is due to him or her on the one hand and to ensure that concerns by residents with respect to such a strategy are addressed.

To its credit, Harare City Council has opened a 90-day window within which ratepayers who settle their debts in full will enjoy a 50 percent discount.

It was also resolved that residents with paid-up accounts could be offered discounts to encourage them to keep up to date.

Government, businesses and residents now owe the local authority over $784 million.

When the city introduced a similar facility in 2016, it raked in $85 million.

As at December 31 last year, properties in high-density suburbs owed the city $171,6 million, while the low-density suburbs' share was $189,6 million. Industrial or commercial properties were indebted to the tune of $322 million.

Also, Government owes the city $29,4 million, while Chitungwiza, Norton, Ruwa and Epworth owe $10,2 million, $3,1 million, $96 647 and $12,9 million, respectively, according to council minutes, as reported in this paper this week.

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