MUTARE– City fathers have tabled a US$33 million proposal for its 2021 budget, in order to meet service delivery which has been negatively hampered by hyperinflation.
Finance Director Blessing Chafesuka addressing residents during a supplementary budget and 2021 budget consultation meeting at Mutare hall bemoaned hyperinflation in the country as the biggest letdown in tendering services and procuring equipment.
The proposed budget, approximately $2.5 billion (RTGS), using the official foreign exchange auction rate of US$1: $77 ZW this week, represents a massive upsurge from the 2019 budget of $31.1 million (RTGS).
Chafesuka said also revealed that the local authority wants to charge their rates in forex and are just waiting for the central government to give them a go ahead to start billing using United States dollars currency, to help them meet their current challenges when paying suppliers.
Despite announcing Statutory Instrument (SI) 185 Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No. 3) allowing use of foreign currency, Chafesuka said local authorities have not been given the green light to charge in foreign currency.
Chafesuka said this compounds council’s challenges as suppliers charge in foreign currency or inflated Zim dollar rates in the wake of limited readily available foreign currency from the Reserve Bank of Zimbabwe.
“Councils are at a disadvantage in this hyperinflation operating environment. If we cannot collect US dollars we will continue to struggle as a local authority. Dual pricing and displaying, quoting and offering of prices for goods and services is now the order of the day through SI 185 and we hope to also benefit from this.
“What we are budgeting here today when we reach January next year, our prices in local currency will no longer be the same and this is what we want to make you understand in this budget consultation.
“The proposals we made last year were only effected by the Minister (Minister of Local Government, Public Works and National Housing) in March instead of January. So for the past six months we have been really struggling to stay afloat, as we all know how prices have changed severely this year alone,” said Chafesuka.
Chafesuka said payment delays for projects or tenders done in compliance with the Procurement Regulatory Authority of Zimbabwe (PRAZ) requirements, are a big
He said whilst there is an improvement in revenue collection this year, expenditure has increased against a nail biting hyperinflation and cumbersome procurement process that delay payments.
Chafesuka said procedural delays have also frustrated efforts to replace obsolete equipment, as payments are made after tender approval while prices continue to skyrocket.
“A tender of $500 000 (RTGS) for a printer was made last year but now the supplier wants $2.5 million (RTGS), so this is the harsh reality of why we need to collect foreign currency.
“So when the US dollar rate goes up the prices of suppliers also goes up which is why they often peg excessive Zim dollar rates to try counter the hyperinflation,” he said.
In the budget proposal, sewage and water tariffs for residential areas remain the same as effected in March, but all commercial and industrial sewage and water tariffs as well as miscellaneous tariffs were increased ranging from 120 to 350 percent.
All commercial and industrial tariffs increased by 350 percent with sewage for commercial properties going up from $54 to $243, while water charges range, but the fixed charge went up from $427 to $1923. Parking discs have gone up by 300 percent, from $10 to $40.
Vending market stalls went up by 350 percent, which will see stalls at all the local government areas going up from $5.70 to $25.65, at Sakubva Flea Market permanent stalls will be $85.50 from $19 and weekend stalls went up from $57 to $256.50.
Burial fees will go up by 350 percent increasing from $399 to $877.80 for children and from $912 to $2006. 40 for adults. Health fees will increase by 150 percent, an increment which will see children consultation fees at $75 from $30 and adults paying $112 from $45.
“This is for cost recovery and sustainability. As for residential tariffs we will wait for central government directive. We have only increased all tariffs by a maximum of 350 percent except for those that are of a social nature and affect the ordinary person,” said the finance director.
David Mutambirwa of Mutare United Residents Association (MURA) applauded the improved information dissemination and efficiency on refuse collection by the local authority, but urged it to make use of its ancillary assets and properties for supplementary revenue flows.
He added that lack of consistent auditing of municipal accounts affects the transparency and accountability of councils. “Residents are also left with no yardstick to access the transparency of council finances. Inevitably, such an environment feeds into misconceptions and allegations of financial misuse in councils,” said Mutambirwa.
The finance director said in January the local authority was owed $86 million but this has gone up to $164 million by end of June.
“The ability of a local authority to provide services depends on the revenue it collects. This is the basic fundamental fact that residents and business need to appreciate. The single most deterrent to financial viability in local authorities remains debtors,” said Chafesuka.