Controversial Bulawayo forex discounts endorsed

Vusumuzi Dube, Online News Editor
BULAWAYO residents are going to get a 50 percent discount for settling their rates in foreign currency, while industries will have a 30 percent discount after councillors endorsed the resolution which initially faced resistance from council management arguing that it violated Reserve Bank of Zimbabwe exchange regulations.

Councillors, in June, proposed to offer residents willing to settle their bills in foreign currency a 50 percent discount. This was after a public outcry over a resolution where the local authority directed that they will be indexing their bills in foreign currency, with residents being able to pay tariffs in local currency using the auction rate as per the day of billing.

However, the foreign currency discount move was met with stiff resistance from management who made it clear that they would not implement the resolution as it contravened Reserve Bank of Zimbabwe regulations.

However, according to the latest council report, councillors have seemingly had the last laugh as they passed the resolution and implemented a 30 percent discount to industries that were willing to settle their bills in foreign currency. This was not withstanding, the Town Clerk, Mr Christopher Dube warning the councillors that the move was illegal.

“The Town Clerk explained that based on Statutory Instrument 127 of 2021 schedule (Section 11) council could not offer discounts for people who paid in foreign currency. This was further emphasized by the Minister of Finance and Economic Development while announcing the additional measures to stabilise the exchange rate and inflation control. Considerations had been done to ratify the management decision to index tariffs to the US dollar and that while billing would be in Zimbabwean dollars, payments could be done both in local currency or foreign currency at the ruling interbank exchange rate,” reads the report.

The councillors, nevertheless, dismissed Mr Dube’s advice noting that the local authority needed the foreign currency hence the need for them to give incentives so as to encourage consumers to pay in forex.

“Councillor Edwin Ndlovu noted that council needed foreign currency to continue with service delivery. Government had already started charging some of its services in foreign currency. Civil servants were paid part of their salaries in US dollar. It would be prudent for council to offer 50 percent discount to residents paying in foreign currency. Clrs Lilian Mlilo, Silas Chigora and Felix Mhaka concurred in support of the 50 percent discount in foreign currency payments for domestic debts,” reads the report.

The councillors further noted that residents were in support of the discounts hence it was highly likely that payments would improve once the move was implemented.

“Clr Pilate Moyo was also concerned about the charges in local currency if they would be discounted once converted to foreign currency. Clr Donaldson Mabuto supported the 50 percent discount and encouraged residents to pay their bills.

The Deputy Mayor, Clr Mlandu Ncube, observed that council bills displayed both local and foreign currency charges.
“Council needed foreign currency to acquire consumables and meet up labour demands. Charging 50 percent discount to residents paying in foreign currency was prudent,” reads the report.

Meanwhile, in giving an overview of the impact of the decision, council’s finance department noted that this would result in council suffering losses on accounts with legacy debt balances, where any current payment towards an account balance with legacy debt and denominated in local currency would have lost value in foreign currency.

“The tariffs were set for fair, equitable and reasonable service delivery.

“Reducing the tariffs is correlated to the level of service delivery in a normal economic environment.

“A reduction of tariffs should be funded by an increase elsewhere of tariffs or by a new source of funding. Without additional sources of funding, service delivery suffers.

“This is evident in the challenges council is experiencing of reduced frequency of refuse collection throughout the city, intermittent water supplies, inability to timeously address sewer and water related bursts, impassable roads just to mention a few.

“The current environment of hyper-inflation and loss of value of the local currency cannot sustain further loss of income through discounts,” reads the report.

With the indexing of the bills in foreign currency, Government will be owing; US$563 000, Industry and Commerce; US$3,3 million and domestic debtors will be owing US$11,7 million.

In coming up with the resolution councillors had said the council, which is owed $5 billion, would rather get half of the amount in foreign currency and write off the rest of the bill as that would go a long way in improving service delivery.

The local authority announced the decision to index bills in foreign currency starting on 1 June as a way of hedging against inflation.