HomeBusinessBCC in precarious financial position, battles to service $138,8m debt

BCC in precarious financial position, battles to service $138,8m debt

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BULAWAYO City Council (BCC), currently owed in excess of $144,9 million by ratepayers, is in a precarious financial position, as it battles to service a debt of $138,8m, a development that has deeply affected service delivery.

BY MTHANDAZO NYONI

BCC town clerk, Christopher Dube revealed that debtors stood at $120,4m at the beginning of 2016, but the figure had increased by 20% to $144,9m at the end of November last year.

“The increase was attributable to liquidity constraints currently bedevilling the economy, low capacity utilisation, low disposable income, company closures and high levels of unemployment,” he said.

As at November 2016, residents owed council $83,3m, while companies and government owed $56m and $5,6m respectively.

Dube said the year 2016 had been a hectic one for the city, as it saw the council rising above many challenges and working in an unmatched spirit of unity of purpose in tackling its service delivery mandate and fostering economic development.

“City finances continued to be cause for concern and this linked with the unfavourable economic climate characterised by high interest rates and cash shortages made it extremely difficult for council to carry out capital development,” he said.

Dube said the first quarter of 2016 saw total receipts standing at 66,5% of the accrued income for the same period.
In the second quarter to June 2016, the ratio decreased to 63%.

However, despite the debt collection blitz underway the ratio further decreased to 60,7% in the third quarter ending September 2016, he said.

Monthly cash collections averaged between $4,8m and $5,6m, Dube said, adding council’s expenditure commitments outweigh current monthly collection.

On average, $7,5m monthly cash collections would cover council’s needs for the provision of services, he said.
Dube said in 2016, the bulk of capital development projects could not be implemented due to scarcity of capital finance.

“Regrettably, service delivery was compromised due to lack of funding.

“Cash flow challenges hindered council from paying its trade creditors on time, thereby, negatively affecting relations with suppliers. Failure to pay suppliers within 30 days has seen an increase of suppliers who are now demanding cash up front,” he said.

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