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Patrick Chitumba Midlands Bureau Chief
Residents and companies’ debt to the Gweru City Council has risen to $62 million in the past eight months, from $55 million.
The local authority is collecting $1,4 million per month against a monthly salary bill of $1,2 million, leaving a shortfall of over $700 000 per month.
Council is also failing to meet its statutory obligations to the Zimbabwe Manpower Development Fund (Zimdef), Zimra in the form of Pay as You Earn (PAYE) and Local Authorities Pension Fund (LAPF), as it is busy settling its legacy debt.
This is contained in the 2018 budget feedback minutes presented to councillors by management on Friday last week.
The minutes show that the local authority is facing severe financial challenges and has an average monthly consumer bill of $2 million.
“The financial position of council since dollarisation in 2009 has been weak,” reads the minutes.
“The budget performance has remained low. This has affected the operations of council and the quality of services rendered to the residents, clients and other stakeholders.
“Council faces severe financial challenges just like any other company or industry in the country. Debtors stand at $62 352 380, creditors $50 205 690, monthly working capital required as per 2018 budget is $3 079 460, monthly collection is averaging $1 400 000 and monthly salary bill is $1 229 981.”
Management noted that the statistics show that council is in a precarious position and faces strong prospects of failing to service debts.
“The statistics reveal that for every dollar of a creditor council has $1,26 to cover for repayment,” reads the minutes.
“This is not healthy because there is a significant percentage of up to 20 percent legacy debt in the council’s debtors figure due to companies under judicial management and those that have closed shop.
“The ratio points to a situation where council is incapacitated to offset its creditors if they were all going to bring action upon council.”
By July 31 the minutes note that council collected about $12 million, representing 48,54 percent of the expected income for the eight months.
“On the other hand, monthly commitments came to $2 265 171 against monthly collections of $1 510 018, leaving a shortfall of $755 153 on monthly bases,” reads the minutes.
“While council has paid $5 197 792 towards net salaries for the past eight months, nothing has been paid for this year’s PAYE, Zimdef and LAFP. Whatever we are paying is going towards the legacy debt.
Whilst council is paying its pensioners monthly to the tune of $25 050, the debt to LAFP accumulated to $12 553 167 as at August 31.”
In attendance was the town clerk, Ms Elizabeth Gwatipedza representing management and mayor Councillor Josiah Makumbe and councillors.
Bongani Ndlovu
Online Reporter