Bulawayo City Council To Introduce US Dollar-Based Rates
Bulawayo City Council (BCC), in the latest council report, indicated it was no longer sustainable to use local currency as it was losing value and affecting service delivery, hence considering billing residents in foreign currency and re-adopted selling of residential stands in US dollars.
The local authority is also considering rebasing its 2020 budget in foreign currency so that it retains value.
The council says in billing residents using foreign currency, those paying in local currency will pay at the agreed US$:Zim dollar rate for the day.
Inflation, council said, had reduced its initial budget of $1,315 billion that stood at US$122 million when it was crafted, to about US$17,5 million.
While council was charging for services in local currency, most suppliers were demanding foreign currency that it does not have.
BCC bases its decision to charge in forex on Statutory Instrument 85 of 2020, allowing citizens to pay for goods and services chargeable in Zimbabwe dollars, in foreign currency using free funds.
Previously, SI 212 of 2019 had made it illegal to quote prices and collect in foreign currency or units other than the Zimbabwe dollar.
Council says it will be forced to introduce a supplementary budget to retain US$122 million if it does not introduce US dollar-based rates.
Deliberate steps, council insists, need to be taken towards generating foreign currency for the city to remain afloat including pricing miscellaneous revenue streams in US dollars.
“Council should price stands in foreign currency. Those who have not paid off their purchase prices for stands will have the balances converted to foreign currency. That council should rebase the 2020 budget and its tariffs to US dollars. Billing will be based on the US dollar tariff converted to Zim dollars. Payment by customers can be in US dollars or Zim dollars at alternative foreign currency market rates,” read the report.
The report states that the rebase should be 50 percent of the tariff that was charged during the dollarisation era.
For instance, residents who used to pay US$15 during the dollarisation era will now pay US$7,50.
BCC says residents have been unwilling to pay bills in foreign currency mainly due to the official exchange rate that is not attractive to members of the public.
“Although council has been willing to accept payments in foreign currency for services and payment of bills since 29 March 2020, none has yet been received. Customers have made enquiries on paying in foreign currency but have found the official interbank rate of $25 which council is using not attractive when compared to the parallel market exchange rate,” reads council’s report.
The need for rebasing the budget in foreign currency was supported by both council’s management and City Fathers in ensuing debate.
“The Town Clerk (Mr Christopher Dube) was concerned that revenue collection was in local currency yet most services were purchased in foreign currency and council did not have it. He said that rebasing was ideal because Council would be able to provide effective service delivery,” reads the report.
“It would also be an advantage to rate payers who wanted to pay in foreign currency. It was also to the advantage of Council because there would be no need to go back to the parent Ministry and residents for a supplementary budget. Residents should be encouraged to use the facility while it still had some value.”
The city’s mayor Councillor Solomon Mguni said while he supported the rebasing of the city’s budget, it should ensure that this did not burden residents.
Bulawayo United Resident Association chairperson Mr Winos Dube, said council’s decision will be unpopular with residents as most of them have no access to foreign currency.
“I must be honest. Looking at the economic situation that we are facing, it will appear the only way to move forward is to go back to dollarising the system. Our own currency is not making things happen. However, what the council is saying could be a burden for residents as most of them don’t have any source of accessing forex. But at the same time, it will make things workable for service providers if residents are able to pay for services in foreign currency,” said Mr Dube.
He supported council’s decision to sell residential stands in foreign currency saying it will give relief to the local authority.
Bulawayo Progressive Residents Association (BPRA) coordinator Mr Emmanuel Ndlovu said payment of rates in forex could prove to be a challenge for most residents as they are not earning hard currency.
He said the local authority should consider gradually introducing rates in foreign currency starting with those leasing council’s properties and those buying residential stands as an initial move.
“We are aware that development of some residential stands stalled after the reintroduction of the local currency. Most property developers were still demanding foreign currency to complete the development projects,” he said.
