BULAWAYO City Council (BCC) is in a serious financial crisis amid indications that the local authority is failing to service a debt of over $168 million, a development that has deeply affected service delivery.
BY MTHANDAZO NYONI
A financial statement review prepared by the council’s financial director Kimpton Ndimande showed that BCC, owed $162m by ratepayers, was failing to meet its financial obligations.
The local authority owed creditors such as the National Social Security Authority, Municipal Provident Fund, the Zimbabwe Manpower Development Fund, TelOne, Zesa, financial institutions, workers, among others, $168m as at July 31.
On the other hand, BCC missed its revenue target by $3,1m in the first seven months of the year.
Accrued income for the period January to July 2017 amounted to $58m, against a budget of $62m giving an adverse variance of $3,1m.
“The major causes of this variance are…reduced water consumption which affected the water and sewerage accounts. Other income account which includes towing fees, parking fees, hire of halls, and development permit fees which had a lower than expected demand,” reads part of the report.
Ndimande said non-renewal of trading licenses by some businesses owing to harsh economic conditions as well as increased interest charges owing to an increase in the number of defaulting ratepayers, also contributed to this variance.
In the period under review, accrued expenditure amounted to $46m compared to a budgeted figure of $62m. Low cash inflows negatively impacted expenditure levels resulting in a variance of $15m.
Of this accrued expenditure, Ndimande said salaries and allowances took the biggest chunk of $32m followed by general expenditure with $20m, repairs and maintenance add up to $4m.
The recharges figure amounted to $11m and this represents the value of work undertaken within council which does not involve the movement of funds.
Ndimande said although cash collections for the month of July increased by 23,83% when compared to the same period last year, there was a decrease of 10,46% when compared to the previous month’s collections.