City continues to wallow in financial poverty

26 May, 2023 - 00:05 0 Views
City continues to wallow in financial poverty Rowan Martin Building, which houses council’s revenue offices.


THE City of Harare realised total revenue inflows of ZWL$38,4 billion in the first three months of 2023 between January and March with the figure owed to the city growing to ZWL$123 billion in the first quarter of the year.

Suburban Reporter 

Revenue collection remains suppressed at 55 percent in March although this was an improvement from the collection efficiency of 48 percent in February.

Almost half of the $38,4 billion was collected in March alone as the city realised revenue inflows totaling ZWL$16.7 billion. These inflows included Devolution Funds of ZWL$122 million, City Parking remittance of ZWL$ 495 million, Traditional Beer Levy of ZWL$ 106 million and a donation amounting to ZWL$ 34 million.

“From the consolidated bill, current obligations and legacy debt, the city collected ZWL$11.11 billion and the balance of ZWL$ 5.64 billion was collected from non-billed services and external sources for the month of March 2023. Collection efficiency for the month of March improved to 55 percent of the potential from a collection efficiency of 48 percent in the previous month,” said Mayor Jacob Mafume while presenting the city’s end of first quarter report at Town House last week.

Councillor Mafume said the city’s debtors stood at ZWL$123 billion as at March 31, 2023, a jump of ZWL$27 billion from the January 1, 2023 position of ZWL$ 96 billion. 

Debtors grew 28.52 percent from the beginning of the year’s position of 16.17 percent. Industry and commerce owe the largest chunk at 52.65 percent, followed by domestic ratepayers at 40.07 percent, Government, 3.65 percent, dormitory towns 2.87 percent and sundry debtors 0.76 percent.

Cllr Mafume warned that the municipality will resort to service disconnections to compel the debtors to pay up. 

“A note to the businesses, parastatals and government entities operating in the City of Harare: The practice of sustained non-current debt not being paid up is negatively impacting the city’s finances. If this categories of debtors do not honour their obligations, we will institute tighter control through service disconnections for any debt over 60 days,” he said.

On its part, the City of Harare owes its suppliers ZWL$22.75 billion as at March 31, 2023, more than double the ZWL$9.9 billion it owed as at January 1, 2023.  

The major drivers of the city’s own liabilities are electricity charges of 35.47 percent, water chemicals of 12.29 percent, statutory obligations 23.68 percent and trade creditors 28.16 percent. 

Furthermore, council has an outstanding obligation of ZWL$0.12 million from FBC Bank, PSIP loans ZWL $100.95 million and an obligation to service the US$70.05 million loan facility from China Export and Import Bank for Morton Jaffray Water Works refurbishment. 

“Electricity charges remains high as electricity tariffs keep increasing at the back drop of loss in value of the ZWL. Accrued expenditure for electricity as at 31 March 2023 amounts to ZWL8 billion as the city is accruing close to ZWL 1.9 billion on a monthly basis. On this monthly accrual is ZWL450 million from hostels an unsustainable cost which the city needs to shed off and have the residents install prepaid electricity. 

“From the breakdown above, electricity is our major cost driver and we are engaging ZESA for concessionary tariffs because our activities are merely public services, we do not operate on a profit making basis. Our water treatment plants and waste water treatment plants consume more power,” said Cllr Mafume.

He said the city was mulling introducing alternative energy solutions to reduce its indebtedness to ZESA and engage the power utility over its own liabilities to the municipality as it owes council ZWL$900 million in outstanding royalties.

“We are also pursuing the introduction of green energy and as such we are seeking partners to work with in the development of solar farms and we hope to use the solar energy to power the water and sewer treatment plants. 

“We will be engaging the highest offices from ZESA on the non-payment of royalties by ZESA: Our records indicate that ZESA owes the City of Harare a total over ZWL 900 million in royalties. 

The royalties accrue from the sale of electricity within Harare and the money has not been paid since 2009,” said Cllr Mafume.

The mayor also said ZESA was charging the city steep interest rates and the municipality will engage the power utility over the matter. 

“The 200,5% interest per annum that is being charged on outstanding debt is very steep. Our average monthly bill is ZWL1,9 billion and interest is ZWL1,2 billion. In view of the fact that the City of Harare uses most of the power to produce water, for waste water treatment and for public lighting purposes is justification enough for the downward review of the interest in these areas.”

Harare also wants tariff increase exemptions from the power utility on water production, waste water treatment and public lighting as well as the rural electrification levy. 

“We appreciate the need for tariff increases we seek exemption from surges in tariffs especially for water production, waste water treatment plants and public lighting.

‘‘As a public services provider, we believe that we must be charged concessionary tariffs. We seek exemption from payment of the rural electrification levy on all our accounts because City of Harare’s customers are mainly the residents who are already charged the levy on their domestic and commercial accounts.”

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