Bulawayo mulls rates review
BULAWAYO Mayor Councillor David Coltart has said the local authority is considering reviewing its rates in response to the macroeconomic stability in the country following the introduction of the Zimbabwe Gold (ZiG).
The ZiG was introduced in April as part of a raft of policy interventions to address exchange rate volatility, curtail inflation, and restore macro-economic stability. It is backed by precious minerals, mainly gold and foreign currency reserves. Zimbabwe has 2,5 tonnes of gold and US$300 million in cash reserves to back the currency.
Of the gold reserves, 1,5 tonnes are held at the RBZ vaults and one tonne is held offshore. The Reserve Bank of Zimbabwe has said the widespread usage of the ZiG currency and its continued stability has the potential to trigger a seamless acceptance of the local unit regionally and globally.
Last year, the local business community accused Bulawayo City Council (BCC) of using an incorrect formula indexing the 2022 and 2023 tariffs to the United States dollar that resulted in exorbitant tariffs. There was a dramatic increase in BCC’s service charges in July 2022, coinciding with the implementation of Statutory Instrument (SI) 118A of 2022, which provided that economic actors should index prices of goods and services to the United States dollar-based pricing.
The SI said economic actors should index prices of goods and services to the United States dollar-based pricing and convert prices to local currency at the bank rate on the date of payment. Speaking during the Confederation of Zimbabwe Industries (CZI) annual general meeting on Tuesday in Bulawayo, Clr Coltart said local authorities are mandated by the Government to accept local currency at the official exchange rate.
He said BCC was then forced to hike rates in United States dollars to cover up for the exchange rates-related losses.
Clr Coltart said if the stability continues, the local authority will consider reviewing the rates.“As we know the city council has been obliged to accept the Zimbabwean dollar at an official rate, and you as businesspeople know that there was a huge gap between the official exchange rate and the parallel market, which doesn’t apply presently,” he said.
“That informed the city council’s decision before I came into office because rates were increasing in US dollars precisely because people could pay in Zimbabwean dollars. The only way that the city council could do to stay ahead of inflation was to ensure that the US dollar rate matched the Zimbabwean dollar in its inflation rate.
“I hope that if the ZiG stability continues, going forward, as a council we may review rates.” Former CZI Matabeleland Chapter president Mr Joseph Gunda said it was not justifiable for the council to raise its rates by between 68 and 205 percent in US dollars terms.
“Industry is being affected by the situation and we have got some who are saying it’s better to move to Harare than operating in Bulawayo because the cost of doing business is very high. This issue of rates must be considered and be dealt with adequately,” he said.
Mr Gunda said as an advocacy group they also urged businesses to come up with their own initiatives, which would enable them to survive and continue with production. — chronicle
