News / National
BCC in financial dire straits
20 Feb 2019 at 22:38hrs | Views
The Bulawayo City Council financials are in the red, a development officials equated to being technically insolvent.
The crisis saw the local authority calling for an emergency financial performance review meeting yesterday to discuss with residents and other stakeholders the way forward with regards to revenue collection and payment methods.
Finance director, Mr Kempton Ndimande told residents and other stakeholders at the meeting that council was facing a myriad of challenges which are mainly as a result of failure by residents to settle their bills, late approval of council budget, hyper- inflation and foreign currency demands by suppliers.
"The biggest problem is that generally our rate payers are not responding like we expect them to. When we send you bills every month, we expect you to pay the bills in full because we urgently need that money. Council depends on the money you pay to fund its operations like providing services and meeting other financial obligations which include paying suppliers and other service providers," said Mr Ndimande.
He said by November last year, the debtors' bill was sitting at $178 million against a creditors bill of $180 million which was a bad sign economically.
"Even if all of us pay today, we cannot pay all our creditors. In accounting, when you do that you are already technically insolvent, you should be closed down. This situation is a technically insolvent situation and this situation goes back to 2013. When we were told to write off debts for our people, that's when we got this problem," said Mr Ndimande.
He said the situation slightly improved last month with the debtors' bill going up to $182 million against creditors' $180 million The finance director said the situation had negative effects on service delivery.
"As a result of that we are failing to give the level of service that we would like to because we are not getting enough feed from residents. Our roads are deplorable, sewers are bursting again but they were under control for some time. They are coming back to where they were, issues that we used to see way before 2009 are coming back," he said.
Mr Ndimande said Council was failing to collect refuse and adequately provide ambulance and Fire services as a result of fuel shortages. He said the late approval of the council's $212 ,5 million budget by Government had resulted in revenue loss for the past two months.
"Because the Minister has not approved the budget yet it means the charges we were supposed to have levied you in January and in February and most probably March have been lost. It means our budget has already been negatively affected by this non-approval," he said.
Mr Ndimande said the major challenge council was facing from service providers was that they were now charging in foreign currency while residents were paying using RTGS and bond notes.
"And there are general increases out there, prices have gone up, we need spares for motor vehicles, chemicals for water treatment just about everything we have is from outside the country and everything has gone up.
The cost of our inputs have increased. If you look at our roads there is hardly any activity, we can't get tar and other things to work on the roads," said Mr Ndimande.
He said the two percent tax introduced by Finance and Economic development Minister Professor Mthuli Ncube was also negatively impacting on council revenue.
"That two percent is a dent in our pocket. So far we've paid $215 971 for the two percent. One might say that's very little for the council but that's about a day's collection," said Mr Ndimande.
He said the recent fuel increase has seen the local authority's fuel budget shooting up to about $2, 2 million per month which was not budgeted for. Council requires 80 000 litres of diesel and 50 000 litres of petrol per month for its fleet, said Mr Ndimande.
Deputy mayor Tinashe Kambarami proposed that residents discuss payment methods, including paying for some services in forex. Residents and stakeholders were divided on the issue of paying in foreign currency with many saying they had no access to forex.
The crisis saw the local authority calling for an emergency financial performance review meeting yesterday to discuss with residents and other stakeholders the way forward with regards to revenue collection and payment methods.
Finance director, Mr Kempton Ndimande told residents and other stakeholders at the meeting that council was facing a myriad of challenges which are mainly as a result of failure by residents to settle their bills, late approval of council budget, hyper- inflation and foreign currency demands by suppliers.
"The biggest problem is that generally our rate payers are not responding like we expect them to. When we send you bills every month, we expect you to pay the bills in full because we urgently need that money. Council depends on the money you pay to fund its operations like providing services and meeting other financial obligations which include paying suppliers and other service providers," said Mr Ndimande.
He said by November last year, the debtors' bill was sitting at $178 million against a creditors bill of $180 million which was a bad sign economically.
"Even if all of us pay today, we cannot pay all our creditors. In accounting, when you do that you are already technically insolvent, you should be closed down. This situation is a technically insolvent situation and this situation goes back to 2013. When we were told to write off debts for our people, that's when we got this problem," said Mr Ndimande.
He said the situation slightly improved last month with the debtors' bill going up to $182 million against creditors' $180 million The finance director said the situation had negative effects on service delivery.
"As a result of that we are failing to give the level of service that we would like to because we are not getting enough feed from residents. Our roads are deplorable, sewers are bursting again but they were under control for some time. They are coming back to where they were, issues that we used to see way before 2009 are coming back," he said.
Mr Ndimande said Council was failing to collect refuse and adequately provide ambulance and Fire services as a result of fuel shortages. He said the late approval of the council's $212 ,5 million budget by Government had resulted in revenue loss for the past two months.
"Because the Minister has not approved the budget yet it means the charges we were supposed to have levied you in January and in February and most probably March have been lost. It means our budget has already been negatively affected by this non-approval," he said.
Mr Ndimande said the major challenge council was facing from service providers was that they were now charging in foreign currency while residents were paying using RTGS and bond notes.
"And there are general increases out there, prices have gone up, we need spares for motor vehicles, chemicals for water treatment just about everything we have is from outside the country and everything has gone up.
The cost of our inputs have increased. If you look at our roads there is hardly any activity, we can't get tar and other things to work on the roads," said Mr Ndimande.
He said the two percent tax introduced by Finance and Economic development Minister Professor Mthuli Ncube was also negatively impacting on council revenue.
"That two percent is a dent in our pocket. So far we've paid $215 971 for the two percent. One might say that's very little for the council but that's about a day's collection," said Mr Ndimande.
He said the recent fuel increase has seen the local authority's fuel budget shooting up to about $2, 2 million per month which was not budgeted for. Council requires 80 000 litres of diesel and 50 000 litres of petrol per month for its fleet, said Mr Ndimande.
Deputy mayor Tinashe Kambarami proposed that residents discuss payment methods, including paying for some services in forex. Residents and stakeholders were divided on the issue of paying in foreign currency with many saying they had no access to forex.
Source - chronicle
