News / Local
ZITF seeks refuge from currency crisis
11 Jun 2023 at 16:33hrs | Views
THE Zimbabwe International Trade Fair (ZITF) Company has proposed to pay its utility bills to the Bulawayo City Council (BCC) four months in advance citing a free-falling local currency.
The local currency has been on a free-fall, trading at beyond $7 000 to US$1 on the black market against at just over $4 000 using the official interbank rate.
President Emmerson Mnangagwa's government reintroduced the local currency in 2019 after a decade of dollarisation.
A number of service providers are now exclusively charging in foreign currency, while others are forward pricing to hedge against losses as the local currency keeps losing value.
According to the latest council minutes, the ZITF Company wrote to the local authority saying this is the reason why it was proposing to pay its bills in advance.
"We wish to settle our bill for the next four months in advance," the ZITF company wrote.
"This being informed by the following reasons: Z$ continuously loses value as such early payment would be beneficial to BCC, moreso, being the fact that the bills are US dollar indexed.
"ZITF Company inflows are seasonal, the ZITF show being the biggest revenue contributor has come and gone."
The ZITF Company said it risked failing to settle its bills and falling into debt if not allowed to pay in advance.
"Our bill is substantial, if we do not attend to it soon after the ZITF show, we risk failing to meet our obligations to BCC," they said.
"With the above proposal, we also seek a waiver on the escalations for the months that would have been settled in advance."
According to the minutes, the local authority was not opposing the idea, but proposed that bills for one month be settled in foreign currency.
"In response the company stated that it did not raise much foreign currency during the annual ZITF show because it was dominated by government ministries, agencies and departments," read the minutes.
"An analysis of ZITF Company's three consumer accounts indicated that they were all current with a combined balance of $32,706,376.89.
"Using the indexed tariffs as at 30 April 2023, the three bills were estimated to be $47, 421,365.31.
"The four months prepayment based on the April 2023 levy (May 2023 bill) had been estimated to be $189,685,461."
City fathers said the arrangement may benefit the cash-strapped local authority.
"Council stood to gain from receiving money in advance while it still had value for use to procure inputs or apply it on projects," the minutes add.
"Prepayment of bills was a normal business practice. Council was working on piloting prepaid water metering."
The local currency has been on a free-fall, trading at beyond $7 000 to US$1 on the black market against at just over $4 000 using the official interbank rate.
President Emmerson Mnangagwa's government reintroduced the local currency in 2019 after a decade of dollarisation.
A number of service providers are now exclusively charging in foreign currency, while others are forward pricing to hedge against losses as the local currency keeps losing value.
According to the latest council minutes, the ZITF Company wrote to the local authority saying this is the reason why it was proposing to pay its bills in advance.
"We wish to settle our bill for the next four months in advance," the ZITF company wrote.
"This being informed by the following reasons: Z$ continuously loses value as such early payment would be beneficial to BCC, moreso, being the fact that the bills are US dollar indexed.
"ZITF Company inflows are seasonal, the ZITF show being the biggest revenue contributor has come and gone."
The ZITF Company said it risked failing to settle its bills and falling into debt if not allowed to pay in advance.
"With the above proposal, we also seek a waiver on the escalations for the months that would have been settled in advance."
According to the minutes, the local authority was not opposing the idea, but proposed that bills for one month be settled in foreign currency.
"In response the company stated that it did not raise much foreign currency during the annual ZITF show because it was dominated by government ministries, agencies and departments," read the minutes.
"An analysis of ZITF Company's three consumer accounts indicated that they were all current with a combined balance of $32,706,376.89.
"Using the indexed tariffs as at 30 April 2023, the three bills were estimated to be $47, 421,365.31.
"The four months prepayment based on the April 2023 levy (May 2023 bill) had been estimated to be $189,685,461."
City fathers said the arrangement may benefit the cash-strapped local authority.
"Council stood to gain from receiving money in advance while it still had value for use to procure inputs or apply it on projects," the minutes add.
"Prepayment of bills was a normal business practice. Council was working on piloting prepaid water metering."
Source - Southern Eye
