Suburban
THE City of Harare hasn’t started repaying he US$72,2 million it owes the China Export and Import Bank almost a decade after receiving the loan to repair major water works in the city.
Suburban Reporter
The US$72,2 million, which council received in 2013, was part of the US$144,4 million loan facility for the Morton Jaffray Water Works refurbishment.
The Harare Metropolitan State of the Province Report covering the period January to August 2021, states that apart from local creditors who are owed a total of $2,609 billion by council, the municipality is still owing the US$72,2 million from the water loan, which it hasn’t made any effort to repay.
The report was produced by the Office of the Minister of State for Provincial Affairs and Devolution in Harare Metropolitan Cde Oliver Chidawu and the Office of the Provincial Co-ordinator Mr Tafadzwa E. Muguti, who has since been elevated to the Secretary for Provincial Affairs and Devolution in the Office of the President and Cabinet under the Minister of Provincial Affairs and Devolution.
In August 2021, council’s creditors increased by $14,06 million to $2,609billion from the July 2021 position of $2,595billion.
There was a marked reduction in growth compared to the previous month growth which was in excess of $100 million.
Although there was a significant drop in growth of creditors, the electricity bill owed to ZESA Holdings surged from $153,45 million in July to $180,45 million in August.
The report said overally electricity now constitute $1,3 billion of the total creditors translating to 50 percent of the total creditors as the municipality’s electricity bills remain a huge challenge for the local authority.
“Furthermore, the position is driven by statutory obligations and water chemicals. Though arrangements for set off of electricity charges are in place and buttressed by a payment plan the creditors position of electricity remain insurmountable.
As of August 30, 2021 the city had a loan balance to CABS of $5 700 million, for road maintenance equipment and also owed FBC Bank $2,526 million for road maintenance equipment as well and a ZWL$1,410 million overdraft facility.
“Apart from the above Council has an outstanding obligation to service the, US$72,2 million of the US$ 144,4 million loan facility from China EXIM bank for Morton Jaffray Water Works refurbishment and no repayments have taken place to date,” reads the report.
The report further says council was owed more than $12 billion as at August 30, 2021 as the debtors continued on an upward trend with industry and commerce constituting the biggest defaulters at 43,32 percent followed by domestic ratepayers at 37,52 percent.
“Debtors stood at ZWL12,812 billion as at 30 August 2021 from the 31 July position of ZWL$11,736 billion. In the month of August debtors continued on an upward trend almost at the same pace as the previous month. Debtors grew by 9,17 percent compared to 10,63 percent in the month of July.
The debt configuration remains as commerce and industry 43,32 percent, domestic 37,52 percent, sundry 14,12 percent and the remaining 5,12 percent attributed to, Government and general debtors,” says the report.
Total revenue inflows for the period (1 January to 30 August 2021) amounted to $6,307 billion. In the month of August, the city had revenue inflows amounting to $1,094 billion.
“Included in these inflows is an Intergovernmental Fiscal Transfers (IGFT) amounting to ZWL$55 million, beer levy amounting to $23,3million, and inflows from city’s business unit City Parking amounting to $7,06 million.”
From the consolidated bill current obligations and legacy debt, the city collected $809,588 million in August last year from a position of $835,957 million in the month of July 2021 and the balance of ZWL$ 284,517 million was collected from non-billed services and external sources.
“Overally there is a stagnation of collectibles of revenues from own sources largely attributed to impact of (the Covid-19) lockdown as economic activity stalls.”
However, the report noted that the city continues to get some donations in cash and kind from donors and well-wishers.
“The city continues to receive donations in cash and in kind amidst resurgence of Covid-19 pandemic. In the month of August, the city received drugs worth $10,145 million from National Pharmaceutical Company.”
The report also noted that Harare’s budget continues to underperform as shown by the variance in the municipality’s own revenue. The Covid-19 lockdown were cited as a contributory factor to this state of affairs.
“The variance in own revenues proportionate budget 2021, accrued January-August 2021 and actual receipts denotes the continuous under-performance of the budget.
August inflows in relation to own generated revenues remained stagnant almost the same as the July position reflecting the impact of the lock down.
The collection efficiency for the month of August stagnated at 42.9 percent same as the July position, against accrued own revenues.”
However, there were expectations that with the relaxation of Covid-19 lockdown restrictions, revenue collection might improve.
“Now that Covid-19 restrictions have been relaxed it is anticipated that collection efficiency will improve in ensuing months and redress cash flow constraints.”
The report noted that a huge chunk of council’s revenue is spent on water and sanitation as well as employment costs.
“Analysis of expenses indicate curtailed expenditure in line with constrained cash flows. Significant outlay has been incurred in goods and services relating mainly to water and sanitation with the cost drivers being electricity, water chemicals and fuel.
“Compensation of employees is inescapable and wage increases have been affected in line with capacity to pay and remain within the budget thresholds though there is pressure for higher remuneration in line with market trends.
“With constrained cash flow marginal capital outlays funded by own revenue were incurred.
“Furthermore, disbursement of Inter-Governmental Fiscal Transfer (IGFT) to undertake designated capital projects remain marginal comparative to the proportionate budget.”
