THE Bulawayo City Council (BCC) has resolved to borrow US$615 000 from its estate account to purchase equipment, despite a prior directive from the Procurement Regulatory Authority of Zimbabwe (Praz) barring such action.
This decision follows Praz’s 2022 move to block the council’s attempt to procure plant and road maintenance equipment, citing concerns over financial mismanagement.
An estate account is a temporary, specialised bank account used to manage the financial assets, debts, and eventual distribution of a deceased person’s estate.
Extracts from a report presented by BCC financial director Tennyson Mpunzi indicate that the council’s resolution to access these funds was a “special” request.
“The Town Clerk informed the committee that the proposal was a special request to utilise the estate account funds in procuring plant and road maintenance equipment,” the report reads in part.
“He further explained that the procurement of compactors was an emergency since the council had been blocked from procuring them by the Procurement Regulatory Authority of Zimbabwe.
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“He said the council had hired refuse compactors that were not performing well. The council was in a crisis due to a lack of effective or functional refuse trucks. Funds were available in the estates account, and utilising these funds was necessary to mitigate the situation.”
Mpunzi’s report also reveals that the local authority has begun repaying the funds borrowed in 2022.
The loan is structured for repayment over 36 months, with an annual interest rate of 5,1%.
“The funds were accessed in June 2023, and to date, a total of US$456 230 has been repaid to the estates account,” the report shows.
However, the report does not clarify why Praz refused to authorise the equipment purchase.
It confirms that the debt will be fully serviced by 2026, though BCC remains financially strained and unable to effectively deliver essential services.
“Since July 2023 to date, all payments had been made as per the repayment schedule. The outstanding balance would be repaid in the remaining 16 months ending June 2026,” it reads.
“Despite the procurement of the equipment, council was still not able to cope with service delivery demands as most of the equipment still required rehabilitation, refurbishment, and replacement. The lack of capacity to replace assets had led the council to continue outsourcing some of its major services such as refuse removal.”
Due to financial constraints choking the local authority, the report warned of a potential outbreak of diseases.
“Despite this effort, the situation remained dire as litter in the city remained a cause for concern as there might be disease outbreaks,” the report states.
“An urgent course of action was required in order to contain the situation, which had also affected storm drainage systems.”
On why the council opted to borrow from the estate account, Mpunzi’s report notes that lenders were unwilling to extend flexible repayment terms.
“In light of the urgent need for a remedial course of action and challenges in borrowing from the open market, funds from the estates account had been utilised to finance replacement of assets,” it states.
According to the report, the equipment BCC intends to acquire will enhance service delivery and reduce costs in the short term. The planned procurement includes four refuse compactors and 10 motorcycles.
“Council would also reduce costs associated with maintenance of old assets and outsourcing of services,” the report states.
“The department had recommended that the action to borrow US$615 000 from the estates account to finance procurement of four refuse compactors and 10 motorcycles be acceded to.”
