CITY OF BULAWAYO BUDGET SPEECH FOR THE YEAR ENDING 31 DECEMBER 2014 HIS WORSHIP THE MAYOR, DEPUTY

MAYOR, COUNCILLORS, LADIES AND GENTLEMEN 1. INTRODUCTION It is a great privilege and an honour to address this Council on this important occasion - the presentation of the proposed budget for the financial year beginning 1st January 2014 and ending 31st December 2014. ECONOMIC BACKGROUND The harsh economic conditions prevailing in the country and the sluggish performance during the run-up to the 2013 harmonised elections affected the 2013 budget implementation as elections took centre stage. The harmonised elections in July ushered a new government effectively ending the Government of National Unity (GNU) which was running the country since year 2009. The new government has a challenge in that a number of issues stand in the way of sustainable economic growth. These issues relate to lack of domestic liquidity, high interest rates, lack of resources to rehabilitate infrastructure and depressed industrial capacity. After the elections, investors seem to have adopted a wait-and-see attitude as no meaningful investment has been recorded in the city so far. The economy is still characterised by low aggregate demand, low wages, low capacity utilisation, low productivity and high levels of unemployment. These factors, unfortunately, have a negative impact on Councils budget performance. 3. CITYS CORPORATE STRATEGY (2013-2017) The Citys Strategy seeks to improve the economic vibrancy of the City, to reverse the negative business trend and make Bulawayo the regions tourism and business destination of choice. It strives to respond to the apparent decline and near collapse of service delivery and the diminishing confidence of investors, stakeholders and residents. The Council strives to fulfill and protect the rights and expectations of its rate payers and communities. The Citys Corporate Strategy also targets the restoration of a robust infrastructural base while addressing the lack of significant, sustainable local authority financing and long term funding of Council programmes. The strategy also recognizes the important role of service delivery partnerships between the City of Bulawayo and Private Sector as well as Non-Governmental Organisations (NGO) through, Private Public Partnerships (PPPs), Corporate Citizenship, Commercialization, Privatization, Outsourcing and Corporate Social Responsibility initiatives. Significantly, this strategy recognizes that sustainability of funding and infrastructural and institutional capacity

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renewal lie at the core of all organs and functions of Council. To that end council expects that programmes currently in progress will be completed and new ones embarked on. 3.1 Twinning Arrangements and Exchange experiences Council has twinning arrangements with various cities such as Aberdeen, Thekwini and Polokwane, and is working on similar arrangements with Siping in China, and Francistown in Botswana. To nurture such relationships various programmes and exchange experiences should be undertaken jointly with relevant sister cities. Council therefore expects significant support from relevant government ministries, particularly the Ministry of Local Government and National Housing, Ministry of Finance, Ministry of Foreign Affairs as well as from the Minister of State for Provincial Affairs- Bulawayo. Council prays that these ministries provide prompt approval and facilitation of plans and programmes that are aimed at consummating these twinning arrangements, 3.2 Inclusiveness and Community Participation Your Worship, Council has always valued community participation in service delivery from year to year, and 2013 was no exception. Various community groups were involved in sweeping streets and clearing storm drains in their various wards. Council paid for these services and thus contributed to the well being of the community members involved. Wards have also been involved in Community-based Planning and budgeting, thus ensuring full participation of citizens at ward level in civic affairs and management of the city. 4. INFLATION AND INTEREST RATES The year on year inflation is expected to close at 3.9 % in 2013, while interest rates remained stable between 16-20% per annum during the year. The high interest rates were a deterrent to meaningful borrowing meant to finance major capital projects which would otherwise improve service delivery in general and the dilapidated infrastructure in particular. DE-INDUSTRIALISATION IN THE CITY The continuous closure or relocation of local companies is of major concern to Council as more and more ratepayers are rendered jobless. This development has seen ratepayers failing to pay their bills on time. Many people have joined the informal sector in order to make ends meet. Income raised from informal trading is prioritised towards food and other basic commodities resulting in less and less resources being channelled towards payment for services. It is however noted that currently, the few companies that are still operational have registered low capacity utilization estimated at between 30-60%, owing to a number of factors which include: Shortage of working capital Unavailability of lines of credit
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Erratic electricity supply Low demand for products and services due to the liquidity crunch High production costs that compete with cheaper imports in a number of sectors like the retail and textile industries Scarcity of long term funding

Council is however aware of government efforts aimed at reviving industry in the city. This is a welcome development that is expected to create employment opportunities for the residents. 6. AGRICULTURE AND MINING SECTORS There has been no meaningful change in agriculture and mining sectors in the year 2013 due to lack of capital funding. This has affected the production of goods by the associated industries in the City. Agriculture and Mining have the potential to drive the economy if well funded and normal rains are received. The mining sector has not had the desired positive economic effect on the fiscal performance. The much publicised diamond fields have not yet had a telling effect on the liquidity situation in the country. As a result of that, the city has not received meaningful funding from government by way of loans and grants in 2013. At this juncture, I would like to briefly talk about agriculture and Mining separately as I perceive their importance to the citys economic revival.

6.1 Councils Urban Agriculture Policy The City has a policy on urban agriculture which seeks to improve food security while at the same time improving the livelihood of the citizens in the informal sector who sell their products. This will cascade to improved health for the citizen of the city thus helping in achieving one of the citys priority areas of Health Delivery. This is made possible by the fact the agricultural produce forms a big part of the merchandize for the informal sector, which I have referred to in item 5 above. 6.2 Mining Sector There is a lot of mining activities within and around the city. Improved investment in this sector, aimed at building relevant refineries will, hopefully, result in the beneficiation of the minerals extracted. This would create down-stream industries which would in turn create employment and wealth in the city. 7. MINISTERIAL DIRECTIVE TO WRITE OFF DEBT It will be recalled that government through the Ministry of Local government directed all local authorities to write off debts on domestic consumer accounts as at 30 June 2013. Council complied with the directive and wrote off $49, 9 million. The write-off included services such as water, refuse removal, rent, interest, rates, the pipe line levy, and any charges that were outstanding as at 30th June 2013. While the directive, brought relief to the ratepayers who owed
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for services rendered, it left Council in a difficult financial position as it had the obligation of settling its debts while ratepayers had been given the relief. Council owed creditors $78 million at the time of the write off and part of these will inevitably have to be paid in 2014. Furthermore, cash collections dropped by about 40% at the time of the announcement. It has also been noted that the debtors figure after the write off continues to rise and this has adversely affected service delivery. 8. COUNCIL BUDGET 2014 In crafting the 2014 budget, Council took into consideration the following: Inflation Interest rates De-industrialization The Liquidity crunch in the country and Vulnerable groups Stakeholder priorities Despite the factors mentioned above, Councils desire to offer improved services to residents remained a top priority. It was therefore prudent to balance service delivery and affordability of charges by ratepayers. At an average of 72 % of monthly accrued income, the Ratepayers accounts settlement rate is not very encouraging 9. ECONOMIC OUTLOOK The economic outlook in 2014 will largely depend on government direction that is yet to be clarified. Council appreciates government efforts aimed at the revival of industries in the City and looks forward to their implementation. The then government of National Unity availed $40 million under the Distressed Industries and Marginalised Areas Fund (DIMAF). However, confusion over the disbursement of the fund frustrated re-industrialisation efforts to Councils disappointment. Council would also want to play its role in promoting industry by, among other things, charging reasonable tariffs and creating an investor-friendly environment. Your Worship, Councils spirit is buoyed by provisions in the new constitution of Zimbabwe which seeks to allocate about 5% of the national budget to local authorities. It is Councils hope that the Ministry of Finance will follow through and disburse the money as soon as possible in the New Year. This would greatly assist in improving service delivery. Despite the afore-mentioned economic hardships, Council availed residential stands in high density and low density suburbs to home seekers in 2013 through the pre-sale scheme and more stands under the same scheme will be availed during the 2014 financial year.

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CONSULTATION Your Worship, I now turn to the Councils budget for 2014. This budget has been crafted according to the ministerial guidelines contained in Local Government Circular No 3 of 2012, the highlights of which are: 1. Budget estimates should be a product of a participatory process achieved through consultation of stakeholders. 2. Existing macro-economic fundamentals should be used in crafting budget estimates e.g. inflation, gender and millennium development goals. 3. Cost effective tariffs should be charged 4. Council staff costs should be in the ratio 30% to 70% of total revenue budget. I explain below how each of these has been dealt with:

10.1 Budget Estimates as a Product of Participatory Process Through Stakeholder Consultation The first Consultations of stakeholders and residents on the preparation of the 2014 budget were advertised on the 10th of October 2013 and held from 11th of October 2013 to 18 October 2013. A total of 2045 people attended these consultation meetings. The 2013 attendance marked a decrease compared to the previous figures where 2423 people participated. Among the Stakeholders invited were, Residents, Transport operators, Residents Associations, Civil Society Organisations, Media, Bulawayo Informal Traders Association and Industry and Commerce. From these consultations stakeholders suggested that Council should prioritise services as follows: (a) Water (b) Sewerage (c) Health (d) Housing (e) Roads (f) Education (g) Public Lighting (h) Social Services (i) Fire and Ambulances The second consultation of Stakeholders was advertised on the 24th of October 2013 and held from the 25th to the 29th of October 2013. A total of 2046 people attended these consultations while during the 2013 budget consultations a total of 2428 people attended these meetings indicating also a drop in attendance figures. The main aim of the second consultation was to confirm the priorities set by residents and present the 2014 proposed budget according to the priorities. The budget presented to the residents saw the revenue budget being reduced from $123 million to $113.76 million, while the capital budget also went down from $45 million to
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42.4 million. In light of this development, no tariffs have been proposed for increase in 2014. The residents largely accepted the budget proposed. 10.2 Existing Macro-Economic Fundamentals Your Worship, these have been dealt with earlier under items 2 and 9 10.3 Cost Effective Tariffs Cost effective tariffs will be dealt with in item 15 towards the end of this presentation. 10.4 Council Staff Costs to be Within Threshold of 30% of the Total Revenue Budget Councils current budget did not achieve this 30% threshold; because Council remains labourintensive in its operations. Staff remuneration is a product of negotiations between employer and employee and Council is no exception. However, efforts are underway to bring the ratio as close to 30% as possible. Some of the measures being undertaken include a current freeze on employment, a job evaluation exercise soon to be carried out, community involvement in service delivery, contracting out certain services, as well as increased mechanisation, among others. May I point out at this juncture that the negotiations between Council and its employees are ongoing now and will be made very difficult by recent pronouncements by Government to substantially increase salaries of civil servants. May I mention here with concern that remuneration levels at lower grades are well below the Poverty Datum Line (PDL). It is also important to point out that at the current collection rate, Council is not able to pay its workforce on time. 11. GENDER BUDGETING Council has embraced the concept of gender budgeting as it continues with the efforts to address gender disparities in the community. Council`s budget endeavors to address the needs of women, men, boys and girls in their diversity through prioritization of services such as access to clean water and health because of their gender impact. However, lack of sex disaggregated data from authentic sources makes it difficult to respond fully to the issues relating to gender budgeting. Council through its processes has managed to collect data such as levels of participation by different age groups of women and men during consultation. A balanced recruitment between boys and girls at various vocational training centres as well as beneficiaries of bursaries will be observed. Council will continue to be gender responsive in all its programmes.

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VULNERABLE GROUPS In an effort to alleviate the hardships faced by the vulnerable groups, Council will continue giving 5 kilolitres of water per month per household for free. Rates rebates will also continue being offered on application to senior citizens who are above 70 years of age. Community gardens will also be encouraged in order to empower the less privileged members of society.

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2014 REVENUE BUDGET Your Worship, as indicated earlier, the budget has been prepared with the contributions and inputs from stakeholders and residents in all the wards. Residents indicated during consultation meetings that they wanted the service levels to improve. The major challenge faced during the preparation of the 2014 budget was how the budget would be financed. Low levels of disposable income in the City due to de-industrialisation and liquidity constraints, among others, renders the improvement of service delivery a challenge. There is a need to balance the rehabilitation of dilapidated infrastructure and payment of recurrent costs. All the service deliverables need substantial finance to be achieved as in some areas infrastructure had virtually collapsed. Other challenges that would adversely affect financing of the 2014 budget are: Lack of funding in the form of loans and grants from Government. Inability to pay timeously for services rendered by some consumers, industry, commerce and government. Under-performance of Strategic Business Units (SBUs) which results in their failure to pay dividends.

This basically means that the level of service delivery has to match the income that is received as Council can only be able to spend what has been received. As at September 2013, Council was owed US$ 64 million by ratepayers. The increase in debtors is a cause for concern as Council would in the long term fail to service its creditors bearing in mind the unfavourable current ratio of 0.77 after the write off. Ratepayers are therefore encouraged to pay their bills on time so as to enjoy quality services. The city wishes to regain its status of being the cleanest city in the region. Your Worship, in view of the foregoing, I propose that the total revenue budget for 2014 be pegged at US$ 113,762,104.

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Revenue Budget by Account I will now proceed and give you Councils accounts in accordance with their structure, together with their corresponding expenditure and income. Your Worship, I will explain which services fall under which account as I proceed. In summary, the proposed Revenue budget stands at $113,762,104 As depicted in a table.

Table 1 presents revenue budget per account group ACCOUNT Expenditure $ Rate & General Services Account Housing Account Health & Community Services Acc Estates Account Sewerage Account Water Account Total 52,037820 1,674,915 29,461,002 715,669 5,817,752 24,054,946 113,762,104 Income $ 54,413,997 2,429,775 3,939,145 3,035,608 10,005,370 39,938,209 113,762,104 Surplus/(deficit) $ 2,376,177 754,860 (25,521,857) 2,319,939 4,187,618 15,883,263

The costs of the various services have been grouped under their relevant accounts 14.1 RATES AND GENERAL SERVICES ACCOUNT Services that fall under this account are: (1) Administration, (2) Recreation, (3) Protection, (4) Health Sanitation, (5) Health General, and (6) Works Total revenue expenditure for the rates and general services account for the year amounts to $ 52 million and the income budget for the account is $ 54.4 million. The Surplus of $ 2.4 million

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will be used to fund other services. The Revenue budget for services under this account are dealt with as follows. 14.1.1 ADMINISTRATION Administration refers to overhead expenses incurred for the general running of the city. These will include the Town Clerks office, head offices of each department, Human Resources, and Internal Audit. Revenue expenditure for administration amounts to $20.4 million and will be financed mainly from property taxes.

14.1.2 RECREATION Total expenditure under this service amounts to $2.4 million and include maintenance of parks and swimming pools. This will be financed from the admission fees and hire for swimming pools budgeted under this service, and any deficit will be funded from property tax. 14.1.3 PROTECTION Ambulance service, Fire brigade, Public lighting and Traffic Control constitute the protection function. Stakeholders ranked the related services low as evidenced in the ranking list since presented. Total revenue budget expenditure under this heading amounts to $9.4 million. This will be funded from ambulance fees, fire brigade charges and parking meters among other fees, and any deficit will be funded from property tax. 14.1.4 HEALTH SANITATION Health sanitation is composed of solid waste management and public conveniences. It was ranked as the third highest priority by the stakeholders. The total revenue expenditure budget for this service is $ 7.1 million. This will be funded from refuse removal and disposal fees. 14.1.5 HEALTH GENERAL This service comprises health service administration, environmental health and pest control. It is a branch of Heath Delivery Service together with Heath Sanitation that I have just referred to. Expenditure of $3 million is budgeted for under this service. This will be funded from trading permits, business inspection fees, and shop licences. Any deficit will be funded from property tax 14.1.6 WORKS Estimated expenditure of $9.6 million is budgeted under this service for the maintenance of roads, bridges, subways, storm water drainage, processing of development permits and other services. Funding will be expected from plan fees, development permits, building inspection fees and advertising fees. Any deficit will be funded from property tax. In view of the poor
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state of our roads, a substantial amount of the property tax will be used to maintain them. This is an attempt to satisfy our fifth priority mentioned earlier. On an optimistic note, Your Worship, the ZIMBABWE NATIONAL ROADS ADMINISTRATION, (ZINARA), have promised that for the next few years, they will be buying equipment for roads maintenance. They have already delivered to Council tar-patching plant a good sign that they intend to keep their promise. 14.2 HOUSING ACCOUNT A total amount of $1.6 million is budgeted under this service as revenue expenditure. Funding will come from budgeted rentals. The budget on this account is for the administration of housing offices, housing registry, maintenance of Council flats and hostels. Servicing of stands is provided for in the capital budget. 14.3 HEALTH AND COMMUNITY SERVICES A total revenue expenditure budget of $ 29.4 million is provided for under this account. The budgeted income amounts to $ 3.9 million. Part of the deficit in this account will be met by a subvention from the Rates and General Services account. Services under this account are dealt with below. 14.3.1 PERSONAL HEALTH Primary health care is budgeted for under personal health service. Revenue expenditure for nineteen (19) clinics and one (1) hospital amounts to $16.7 million. Part of funding will be expected from admission fees charged at the clinics and hospital and the deficit will be financed from surpluses derived from other services. This, together with Cemeteries, is again linked to the third priority that I referred to earlier. 14.3.2 CEMETERIES A budget of $ 0.9 million is provided for cemeteries to ensure availability of graves. This will be funded partly from the burial fees and other charges for burial services. 14.3.3 EDUCATION SERVICES Education was relegated to 6th position on the priority list. However, to enable our children to learn under suitable conditions, an operational expenditure budget of $4.9 million has been made for providing primary education at the 29 Council primary schools and Sizalendaba Secondary School. Council is expected to supply textbooks, sports equipment and also cater for the administration costs. Funding will be realised from tuition fees, Council levy, sports levy and textbook levy charged in the schools. Any deficit will be funded from property tax

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14.3.4 COMMUNITY SERVICES Libraries, halls, stadia, and youth clubs among other services fall under community services. Expenditure of $ 6, 7 million is provided for repairs and maintenance of these facilities. This will be financed from admission fees charged for various activities such as soccer and musical shows. Hire fees derived from halls and other community facilities will also fund the service. This is in pursuit of the sixth priority. 14.4 ESTATES ACCOUNT Operational and maintenance costs for the bus termini and other Council properties are budgeted at $0.7 million under this account. Entrance charges for buses and other vehicles have been budgeted for under this service 14.5 SEWERAGE ACCOUNT Sewerage services are very high on the stakeholders priority list, second only to Water. A welldesigned and well-maintained sewerage system enables sound treatment of sewer such that there is no discharge of raw sewer to streams and water ways. This keeps the environment clean and healthy for all stakeholders. It is important to mention here that the Environmental Management Authority, (EMA), has often raised concerns, and fined Council for a poorly maintained sewerage infrastructure. Provision of sewerage services entails operation of sewerage treatment works, pump stations and reticulation. Equipment acquired to assist in managing our sewer system has to be maintained as well. Revenue expenditure of $ 5, 8 million is provided for this service while income is expected to amount to $10 million. Sewerage fees, vacuum tanker services and other services are budgeted to finance this expenditure. The surplus will be applied to the maintenance of the system. 14.6 WATER ACCOUNT Providing safe drinking water is top on the priority list. The water account encompasses conservation, administration, delivery, purification and reticulation of water. A revenue expenditure budget of $ 24 million is provided for the water account. The water consumption, penalty for over use and the fixed charges is expected to raise $39.9 million. The surplus income in this account will be applied to rehabilitate water infrastructure and finance other services. I would like to point out that residents of the City would benefit a lot from effective water management system in that water losses would be minimised and clean water delivery even to the far ends of the city would enhanced. 15. RECOMMENDED TARIFFS Mr Mayor, in view of the challenges affecting the ratepayers and the city, the Council is recommending a standstill tariff structure. No tariff Increases in 2014! The tough economic period that we are currently facing calls for more innovation, while remaining highly productive. Council must ensure that all loopholes that may exist in the billing of all properties
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are addressed urgently so that all consumers of the services contribute towards service delivery in the city. 16. CAPITAL BUDGET The total capital budget for the year 2014 is $ 42 million. This is also shown by account in a table. Capital Budget per account group is as follows: ACCOUNT GROUP Rate & General Services Account Housing Account Health & Community Services Account Estates Account Sewerage Account Water Account Total AMOUNT 13,707,803 1,345,000 8,466,170 4,190,150 1,805,000 12,920,590 42,435,513

16.1 RATES AND GENERAL SERVICES The total capital budget under this service is $13.7 million. The budget seeks to replenish refuse compactors, plant and related equipment, for refuse removal. Council roads need rehabilitation as most service roads are virtually impassable. Tower and street lights need constant repair and constant maintenance. The capital budget under this service seeks to address these challenges and improve services to the ratepayers. 16.2 HOUSING SERVICES ACCOUNT Council rents out buildings such as Vundu, Vulindlela and Sidojiwe flats that are in a dilapidated state and require major rehabilitation. New office furniture and equipment is also required in the housing offices in order to improve services to ratepayers. A budget of $1.3 million is allocated to this service. 16.3 HEALTH & COMMUNITY SERVICES ACCOUNT Under this service, Council has budgeted for the construction of clinics and community facilities such as community halls and libraries in Emganwini and Cowdray Park suburbs. New Schools have also been earmarked for construction in identified areas. Barbourfields, Luveve and White city stadia are also earmarked for upgrade in 2014. Replacement of furniture and equipment is also covered in the budget. The budgeted figure is $ 8.4 million for the above projects.
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16.4 ESTATES ACCOUNT Council intends to improve infrastructure such as commuter ranks and bus stops, and refurbish Ascot buildings. There are about 3000 stands that have been earmarked for issue under the presale scheme and Council needs to purchase land for expansion purposes. A budget of $ 4.1 million has been allocated to this service. 16.5 SEWERAGE ACCOUNT The capital budget under this service entails carrying out feasibility studies of sewer treatment at Aiselby and designing of a sewer pump station in Cowdray Park. A budget of $1, 8 million has been set aside for this purpose. 16.6 WATER ACCOUNT Water infrastructure is dilapidated. The budget proposes rehabilitation works at Tuli, Nyamandlovu and Fernhill water pumping stations. The drilling of boreholes in the Epping Forest, budgeted for under this service will be augmented by the $1-per household charge that was proposed by the stakeholders in 2012. Council intends to replace non functioning water meters and implement water loss reduction measures which would reduce the cost of supplying water to consumers. The capital budget will require financing to be obtained through borrowing powers. The successful implementation of this budget is dependent on the availability of finance at affordable interest rates. 17. CONCLUSION Your Worship, I would like to conclude by expressing my gratitude to ratepayers who have continued to pay their bills despite the hardships they face and various stakeholders for the support rendered. They kept the city moving and I hope this will continue in order for the City to continue offering services to its citizens. It is my hope that the year 2014 will see improved economic performance generally which will translate to the revival industries in the City This should translate to improved service delivery. I would like to express my appreciation to fellow Councillors, Council Management and Staff for crafting this budget. I want to impress upon the Councillors, stakeholders, residents and Council staff that will implement and monitor the 2014 budget to do so diligently in the interest of the City. The support of all stakeholders is required to ensure that Bulawayo lives. I therefore lay the 2014 budget on the table for your consideration. I thank you! Councillor J Sithole CHAIRMAN OF THE FINANCE AND DEVELOPMENT COMMITTEE

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