CASH-strapped Gweru City council has conceded that it is now technically insolvent and its coffers are dry.
A company or organisation is technically insolvent when it is incapacitated to sustain its operations and requires the services of a judicial manager.
In his admission that point to the need of a commission to run the affairs of the MDC-Alliance run council, acting director of Finance Mr Masimba Masimba said the local authority was technically insolvent.
He was giving a presentation on the state of affairs of the council to the Zimbabwe National Defence University (ZNDU) students visiting the local authority yesterday.
“So our budget (2019) was $46 million, and as we speak, we have got debtors to the tune of $75 million. We have got creditors to the tune of $74 million. Those who know a bit about financial management, the moment you say you have debtors of $75 million and creditors of $74 million, it means you are technically insolvent,” said Mr Masimba.
He said the major creditors of that $74 million are statutory obligations.
“These are not day-to-day working capital creditors, for example out of the $74 million, $30 million is owed to ZETDC, which is for the electricity used to pump water at our Gwenhoro water works.
“So that is the bulk of the bill. Then we have $13 million that is owed to local authority pension fund, that is the pension for employees and to Zimra we owe $5 million. If you add that, it comes to $48 million, which is 64 percent.
“So the 64 percent of creditors is owed to these statutory obligations,” said Mr Masimba.
He said on a monthly basis, council’s average collection is $2,4 million, adding that the average billing is $3,8 million.
As at September 30, Mr Masimba, said council’s monthly requirements is now at $6 million due to the increase or proliferation in prices that is happening in the economy against a steady budget of $46 million, which was a 1:1 budget.
“We did a supplementary budget which hasn’t been approved by the parent ministry, which means the technical imbalance continues to manifest and we fail to deliver meaningful service to residents,” he said.
ZNDU Vice Chancellor Air Vice Marshal Michael Moyo said he was disappointed by poor service being experienced by residents in Gweru.
He said while Government is making frantic efforts to improve key sectors of the economy, it was disappointing to note that City of Gweru has taken a lazy approach towards service delivery as evidenced by unavailability of clean water, poor health services and poor road network.
In his remarks, City of Gweru Deputy Mayor Councillor Cleopas Shiri said the city is facing a myriad of challenges, but has, however, opened investment opportunities in the areas of waste water reticulation, waste to energy power generation and pre-paid water metering.