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Mrs Ncube

Business Reporter

THE Harare City Council will be in the market early next year to raise funds for several capital projects to make up for the low revenue collection levels while at the same time moving away from over reliance on rates and service fees. Already, some institutions have been approached and council is positive that it will raise the funds required.

The initiative to raise funds on the capital market is influenced by council’s unfavourable revenue collection ratio which currently stands at 50 percent.Also, council is owed close to $500 million in unpaid bills by the private sector, residents and Government and therefore the decision to approach the market to raise capital for various infrastructure projects such as maintaining the road network and housing delivery, among other projects.

Compounding council’s woes was that Government took away the mandate to collect vehicle licence fees from local authorities and authorised the Zimbabwe National Roads Authority to collect the fees.This means council is forced to divert revenue from rates towards road maintenance which takes a huge chunk of council’s budget.

In an interview with The Herald Business Acting Town Clerk Mrs Josephine Ncube said because of these pressures on revenues, council is looking at the possibility of raising funds elsewhere.

“We are also looking at the possibility in 2017 of raising funds on the capital market to revamp our roads among other things and then we can then repay using whatever comes from Zinara and whatever we can salvage from our rates account. We will be taking up that initiative to try and come up with a lump some,” said Mrs Ncube.

Although the modalities are yet to be finalised, the acting town clerk was confident that council can raise the funds on the capital market judging from interactions with various institutions on the capital raising initiative.

“We are bankable. I’m pleased to say that one of our problems in the past was that our audited statements were not up-to-date. But by the end of November we will be up-to-date as at 2015 and going forward in 2017 we will make sure that we are audited within the statutory period. From the engagement we have done with a number of institutions we stand a good chance to raise the funds. We are working with our financial advisors to guide us,” said Mrs Ncube.

The infrastructure projects that council is targeting are contained in the city’s new strategic plan which highlights key result areas that include improving service delivery, organisational development, resource management and modernisation and computerisation of council’s systems.

On the road network, Mrs Ncube said the maintenance of roads is supposed to be funded from largely the vehicle license fees but of major concern was that although Zinara pays out annually, the amounts are not in line with what Harare City Council, for instance used to collect before the new arrangement.

Council has raised the issue with Government.In its 2017 budget proposals council indicated that some of its initiatives will be supported by $75 million from borrowings together plus internal resources.Also, the decision to approach the capital market was influenced by the failure by Harare Sunshine Holdings, council’s business arm.

In the 2017 budget proposals, council indicated that its business venture arm is not performing as expected with contribution way below expectation. For instance, council’s 2016 budget envisaged remittances from Harare Sunshine Holdings amounting to $2 million but a measly $320 000 was received as dividend.

Apart from raising resources on the capital market, council is also implementing other internal controls including tightening its revenue collection systems.