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BCC to offer discount for forex payments

by Staff reporter
26 Jun 2022 at 08:15hrs | Views
Bulawayo councillors have proposed to offer residents that are willing to settle their bills in foreign currency a 50 percent discount.

This follows a public outcry after the local authority, a couple of weeks ago, announced that it was indexing bills in foreign currency with residents being able to pay tariffs in local currency using the auction rate as per the day of billing.

The council which is owed $5 billion has said it would rather get half of the amount in foreign currency and write off the rest of the bill as that would go a long way in improving service delivery.

The local authority announced the decision to index bills in foreign currency starting on 1 June as a way of hedging against inflation.

It has since emerged that councillors, despite initially endorsing the move at a rushed special council meeting after management had made the proclamation with a standing resolution, last Monday attempted to backtrack on the move which led to the calling of an informal caucus between councillors and senior management.

Impeccable council sources told Sunday News that the informal caucus had to be called after a section of councillors had questioned how management could make such a decision without consulting them.

This came as the Bulawayo Progressive Residents Association (BPRA) also refused to meet council management, after management requested the meeting  "to find common ground" on the issue.

"The Monday session was an informal meeting; a caucus with management to deal with a number of matters relating to the new provisions.

It was meant to find common ground on some misleading statements by other policy makers so that we have one voice out there when we meet stakeholders and explain to them our financial problem.

That's why there was no report to discuss and no media, it was all an informal discussion," said the source.

Contacted for comment, Acting Mayor, Councillor Mlandu Ncube confirmed the meeting and said it was also agreed that management draws up incentives for residents willing to pay their bills in foreign currency.

"Yes, that meeting took place and the idea was to have the policymakers and management to engage so that councillors can then go to  residents and inform them on the position and mainly to emphasise that we are not saying they pay strictly in foreign currency, but can pay in local currency, at the prevailing RBZ auction rate.

"What we have further said is the adoption of a discount to those that are willing to pay in foreign currency, so far we are working with a 50 percent discount, but this has to be formally presented by management.

Basically we are saying rather we get the $2,5 billion we are owed of the $5 billion in foreign currency and write off the rest, which

will go a long way in boosting service delivery in the city," he said.

Clr Ncube said the main goal was for the local authority to collect as much money as possible to enable it to provide the necessary services.

Chairperson of the finance and development committee Clr Tawanda Ruzive said council was struggling to get foreign currency which was necessary to run some of the services.

He said there was a need to come up with certain incentives that would enable council to collect revenue in foreign currency.

"A fact that we cannot run away from is that when residents pay in local currency we then have to take that money and apply to Treasury to get foreign currency which takes time and it means by the time we get it, it would have lost its value considerably, which therefore hinders service delivery.

"It is thus better off if we get half of what we are owed as in that case we know that service delivery will be effectively boosted.

Furthermore, what residents have to realise is that $400 during the budget process has devalued, which shows you that we have to come up with measures to ensure that we remain in a position to offer service delivery," said Clr Ruzive.

According to the latest council report the local authority is owed $5 billion of which residents owe $3 billion, industry owes $1,5 billion, Government owes $239 000 and parastatals and self-financing ministries owe $189 000.

"Debtors increased by 13 percent while creditors increased by 18 percent.

Council is running the risk of being unable pay the creditors as gap between creditors and debtors is narrowing.

Management is seized with setting up the debt management unit which will improve collections," reads the report.

However, the proposal by councillors is likely to contravene Reserve Bank of Zimbabwe regulations.

"A natural or legal person shall be guilty of a civil infringement if he or she sells, displays or offers goods or services for sale at an exchange rate above the ruling exchange rate, or imposes (for the predominant purpose of encouraging payment in a foreign currency) a premium on Zimbabwe dollar payments or allows a discount on foreign currency payments," read part of the statutory Instrument 127 of 2021.

Source - The Sunday News
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