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Bulawayo City Council sinks deeper into debt

by Municipal Correspondent
26 Aug 2012 at 13:11hrs | Views
BULAWAYO City Council (BCC)'s financial woes continue to worsen as it sinks deeper in debt, with the city's indebtedness to various institutions having ballooned to over US$62 million, and the local authority desparately seeking alternative means of boosting revenue.

According to the latest council report, the local authority's debt has ballooned to US$62 740 896, a huge chunk of this debt is owed to the Zimbabwe Electricity Supply Authority (Zesa), which they owe US$18 980 261.

The power utility has threatened to take legal action against the municipality after they cut of supplies to key council buildings including the Tower Block, Revenue Hall and City Hall.

BCC also owes the Local Authority's Pension Fund US$17 303 255, US$4 671 771 in unpaid salaries, US$7 934 623 to various financial institutions.

In an interview, the city's acting mayor, Councillor Amen Mpofu, said while they were trying to come up with various strategies to raise funds, residents must also chip in and pay what they owe the local authority.

"The city has a lot of gold deposits scattered everywhere and we feel that if we are granted the mining licence we will surely be in a position to pay off our debts, however, this can be a long-term goal, in the short-term residents can chip in and pay what they owe us.

"We understand that people are facing financial problems but they should also understand that we need money so as to function, just imagine if they paid everything they owe us we wouldn't be in this position," said Clr Mpofu.

The other institutions that the local authority owes include; funeral policy companies (US$1 088 326), Standard Development Levy (US$691 733), Zimdef (US$620 755), TelOne (US$262 682), NSSA (US$204 249) and the Zimbabwe United Council Workers' Union which they owe US$74 389.

The report further states that the local authority has an expenditure of US$5 803 545 for the same month, with US$2 873 096 being gobbled by workers salaries and allowances while the other US$677 546 is directed to other employee-related benefits including stop orders, medical aid, NSSA and Pay As You Earn, bringing the total to US$3 550 642.

This figure therefore puts the local authority on a collision course with the Government as this means 61 percent of their monthly revenue is being used on salary-related costs against the Government stipulated 70 percent service delivery to 30 percent workers' salaries.

Of the total figure just US$100 000 was used for a service delivery related function, this being the purchasing of water treatment chemicals. the rest was used for trade creditors, fuel, cleansing contracts, loan repayments and Zesa.

On the other hand the local authority is owed over US$69 762 704, with residents owing US40 276 315, industry and commerce US$25 655 197 and Government departments US$3 831 191.

In the past the local authority has been in serious financial problems, at one point they were faced with the possibility of losing the Tower Block and Revenue Hall after Kingdom Bank demanded their title deeds when the local authority failed to repay a US$5,7 million loan that was meant for the payment of workers' salaries and purchase of top of the range vehicles for senior officials.

They also considered the retrenchment of 1 049 workers with some having to endure salary and allowance cuts.

BCC recently announced that it had applied for a licence to mine gold at its Aisleby Farm and is prospecting for the mineral at two other farms in a bid to boost its revenue and pay their debts.

Source - sn