NDAMU SANDU
The City of Harare has shelved the issuance of municipal bonds amounting to $100 million after advice from brokers it would suffer losses due to the unfavourable economic environment.
A municipal bond is a debt security issued by a local government or territory, or one of their agencies to finance public projects such as roads, schools and infrastructure-related repairs among others.
Last year, the ministry of Local Government, Public Works and National Housing approved Harare’s plans to raise $100 million earmarked for road maintenance, refurbishing of the water and sewer reticulation system, renovation of council houses in Mbare, building of two new polyclinics and informal sector factory sheds.
Presenting the city’s 2019 budget on Monday, chairperson of the Finance and Development committee Luckson Mukunga said the issuance of the municipal bonds has not materialised spooked by the unfavourable macroeconomic environment.
“According to professional advice from brokers, if municipal bonds are issued now this might lead to losses due to the unfavourable economic environment which is compounded by limited affordable capital and lines of credit on the money market,” he said.
Last year, the City sought approval from ratepayers and voters to raise not more than $100 million to repair the battered infrastructure.
Harare said the money raised would be used to upgrade Geneva, Joburg Lines, Tafara and Zororo houses at a cost of $30 million. The city said it would allocate $25 million for the construction of Lyndurst Sewer Treatment works and set aside $15 million for the replacement of pipes. It allocated $10 million and $5 million for the upgrade of
sewer lines and city maternity clinics respectively.
The city is still reeling from a Government directive in the run up to the 2013 elections ordering municipalities and local authorities to write off all debts owed by ratepayers.
This has seen authorities failing to provide services and repair collapsing infrastructure resulting in the outbreak of cholera in Harare which claimed over 40 lives.
This resulted in Harare collecting $145 million in the period January to September 30 against the targeted $202 million.
Mukunga said the 50 percent discount offered to ratepayers soon after elections resulted in improved revenue inflows with monthly collections increasing to $14,5 million in August from a monthly average of $13 million. Monthly collections rose to $17 million in September and $20 million in October.
