Chronicle Editor
Patrick Chitumba, Midlands Bureau Chief
CITY of Gweru has rebased its 2022 budget in United States dollars using the interbank rate, resulting in a sharp surge in bills.
According to a bill for June–July sent to one of the residents, the monthly amount due shot up from about $3 500 to $13 600 while another statement has a bill rising from about $2 491 to $25 404 in the same months.
In July, the local authority resolved to index bills in foreign currency with ratepayers being able to settle their bills and services using the prevailing auction rate. The local authority’s 2022 budget of $4,9 billion, which was approved by the Government, has depreciated by over 72 percent.
Council said it is seeking to comply with Statutory Instrument 118 A of 2022, which directs suppliers of goods and services to charge their goods and services at the interbank rate plus 10 per cent. The City of Gweru buys goods and services for its service delivery value chain at the interbank rate plus 10 percent and it has to recover costs at the interbank rate plus 10 per cent. The city seeks to use the interbank rate in the payment of bills as a result of the local currency’s volatility.
City of Gweru finance committee chairperson Councillor Martin Chivhoko confirmed the indexing of bills in foreign currency. He said council has maintained the value of the budget as of November 21, 2021 when the 2022 budget was submitted and subsequently approved by the Government. Clr Chivhoko said the increases were justified bearing in mind that council was also operating in a high inflation environment.
“The local authority has started to rebase the 2021 budget in United States dollars using the interbank rate a development that has resulted in a sharp surge in bills. The major cost drivers are Zesa which has gone up from $25 million per month to almost $100 million per month. Service stations now require US dollars for fuel, water treatment chemicals are also going up and the prices are rated to US dollars and the only way is indexing the bills in foreign currency. Residents must still note that they are paying using the prevailing interbank rate,” he said.
Clr Chivhoko said the local authority is facing viability challenges worsened by a volatile currency exchange rate.
“Our workers also need to be cushioned, water treatment chemicals are going up on a daily basis,” he said.
Clr Chivhoko said during the US dollar era, residents especially in high density areas who are the majority were paying between US$30 and US$40 per month towards monthly bills which he said is what is being converted.
“US$10 is close to $1 000 on the black market and we will not manage to give services if things continue as they are. It’s not economically possible for council to exist and offer quality service delivery if a resident is paying a monthly bill of $1 500, which is equivalent to two loaves of bread and at the same time expect council to provide water and refuse collection every week.
“We thought by rebasing things will improve. We will be able to buy fuel and buy vehicle spare parts and water chemicals which are charged in United States dollars. We expect our residents to understand that. The economic situation is just not favourable. People afford to pay for DStv at US$40 per month but want to pay US$2 to council,” he said.
Clr Chivhoko said residents, who have complained that their bills have been increased despite not receiving potable water, should know that the charges factor in other charges like sewer, rates, supplementary charges and refuse collection.
Gweru public relations officer Ms Vimbai Chingwaramusee said, “To sum it up, we didn’t increase the bills as what the residents are saying. What we are basically doing is working with the budget. What we simply did was to rebase the budget and what it means is we are rating the budget as per the interbank rate of the day. That’s how it’s working.”
Ms Chingwaramusee said they are looking at the inflationary environment and juxtapose with offering quality service delivery to residents and industry.
“We didn’t increase the budget or rates as it were. It’s the current bill but looking at the inflationary rate we are saying the bill goes by the interbank rate of the day. This was done to make sure that we give value in terms of services we give to our residents and ratepayers. We can’t continue charging bills not looking at inflation and interbank rate,” she said.
Ms Chingwaramusee said using the 2022 budget which had lost 72 percent of its value was making the local authority insolvent.
“Using that approved 2022 budget and not indexing it was literally destroying the way we operate as a local authority, it was affecting service delivery. So that is why at times we would fail to procure water chemicals or fail to remove refuse in the residential areas. It has been a challenge because suppliers for goods and services demand us to pay in US dollars which we get from the auction. So we were remaining behind and affecting service delivery,” she said.
The Parliamentary Portfolio Committee on Public Accounts recently said local authorities should be allowed to charge companies involved in exporting or selling products in foreign currency, in forex.
Chairperson of the committee Mr Brian Dube said that would help local authorities improve service delivery. Rate payers, especially in urban areas, have to cope with persistent water shortages, uncollected litter, pothole infested roads and sanitation problems as municipalities struggle to provide basic services mainly due to unavailability of foreign currency.
Fuel, spare parts and other consumables needed by local authorities to improve service delivery are sold in foreign currency especially the United States dollars yet local authorities are charging rates and services in local currency.
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