Councillors, management fight over debt recovery

BULAWAYO - The move by Bulawayo City Council (BCC) to suspend litigation against defaulting residents has set city fathers and management on a collision course.

While the move brought relief to scores of residents, who were being harassed by debt collectors, the local authority’s management is totally against it.

In July this year, BCC resolved to stop hiring debt collectors and property attachments over arrears.

However, in the same resolution, the council recommended that the debt collection exercise continues for the commercial sector.

BCC is owed a total $158 million, with $90 million due from domestic debtors.

In his argument on the impact of the resolution, town clerk Christopher Dube said the move was going to grossly affect the city’s revenue collection and consequently service delivery.

“...the decision is and continues to affect council’s revenue collections and the effects will be felt very soon in the form of failing to service our creditors and this includes the payroll obligations,” he told a full council meeting.

As part of his arguments against the council’s debt management policy, Dube cited poor collection of rates, ballooning debt and legal fees losses.

On the collection of rates, he said the suspension of litigation meant that rates will not be collected as the decision is directly suspending Section 281 of the Urban Councils Act.

“It is therefore an illegal resolution,” he argued.

“Most of the rates have not been collected for an excess of three years and if these amounts owing are not collected, enlightened residents will raise prescription as a defence and we will be forced to write-off quite a substantial amount from our books. In fact the issue of prescription may plunge Council into a similar situation to the write-off in 2012,” Dube said.

Turning to the ballooning debt, the town clerk further noted that suspending litigation will actually make the debt balloon to unacceptable levels and will have ripple effects.

“It will affect service delivery which is a reflection of how effective this Council is, the debts will be too heavy to the residents such that by the time we try to recover it, council will be forced to sell the houses. We have tried to avoid selling houses by managing the debt to attachment of small household goods.”

In his final submission, Dube said BCC also suffered legal fees losses as a result of the resolution.

“Council’s decision to suspend litigation was with immediate effect, meaning all processes were recalled and what we discovered is that we made serious losses as a result of the recall of the processes,” he said adding that the decision was “tantamount to shooting ourselves in the foot.”

Dube further said the decision was not in the best interest of the local authority and should be revisited, as it reflected badly on both council and its management.

But deputy mayor Gift Banda argued that council was only responding to an outcry by residents, who risked losing their properties.

“The view was that lawyers and debt collectors were the only beneficiaries of the litigation process, as legal charges were prohibitive. Council had to step in in order to protect its residents,” he said.

Banda was backed by fellow councillors who shot down Dube’s views, while also citing poor governance and prevailing economic conditions.

The councillors unanimously turned down the town clerk’s submission and insisted the resolution be upheld.

 

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