Revenue woes cripple Harare

The Harare City Council has collected only 40 percent of its targeted revenue for the first nine months of 2024, severely hampering its ability to deliver essential services. The council raised ZiG2.01 billion against a billing target of ZiG5.06 billion, citing operational inefficiencies and cash flow challenges as major obstacles.
Revenue Collection Efficiency Improves in Q3

Between January and September 2024, revenue collection efficiency averaged 35 percent in the first two quarters before improving to 52 percent in the third quarter. Presenting the city's 2025 budget, Finance and Development Committee chairperson Councillor Costa Mande attributed the shortfall to the absence of an enterprise resource planning (ERP) system, which disrupted efficient billing and payment processing.

"Total revenues for January 1 to September 30 amounted to ZiG2.01 billion against a billing of ZiG5.06 billion," Cllr Mande said. "The third quarter witnessed significant improvement to 52 percent compared to the 35 percent average in the first and second quarters."

Debt and Creditor Growth

The city's debtors increased by 9.9 percent in September alone, from ZiG2.55 billion in August to ZiG2.75 billion. Commercial and industrial clients account for the largest share of the debt at 66.13 percent, followed by domestic consumers at 26.63 percent, with government and dormitory towns contributing smaller portions.

"Debtors stood at ZiG2.75 billion as at September 30, 2024," Mande explained. "Creditors also grew significantly, rising from ZiG109 million in January to ZiG716 million by September 30. Electricity charges alone constituted 35 percent of the total creditors."

The council's financial woes have also been exacerbated by an outstanding US$68.6 million loan from the Exim Bank of China for the rehabilitation of the Morton Jaffray Water Treatment Plant.

Impact on Service Delivery

Harare has spent just 10 percent of its targeted capital expenditure for the year, with cash flow constraints affecting both recurrent and capital expenditures. Essential items like water treatment chemicals and electricity have taken a significant hit due to the financial shortfalls.

The constrained budget has also limited progress on critical infrastructure projects and maintenance efforts, leaving many areas underserved.

Cllr Mande emphasized the urgent need for reforms, including the adoption of an ERP system, to enhance revenue collection and streamline operations. He also highlighted the importance of reducing arrears and renegotiating terms with creditors to stabilize the council's financial position.

While revenue collection improved in the third quarter, the council's ability to sustain essential services remains a pressing concern as the city looks ahead to 2025.