Councils fleece Govt in land sales ….treasury keen on its pound of flesh

By Ndafadza Madanha

THE bulk of the country’s local authorities (LAs) are not remitting money from sale of land to treasury as prescribed by the law.

Under the law all land on the books of LAs belongs to the state represented by central government and money accruing from the sale of land should be channeled to treasury.

According to the Zimbabwe Economic Update produced by the World Bank (WB) in collaboration with the government LAs revenue rose from US$570m in 2011 to just over US$800m in 2014.

During the period sale of residential and industrial real estate sales grew by over 75 percent toUS$356m from US$200m in 2011.

Finance Minister Patrick Chinamasa acknowledged that most LAs were not remitting the money to treasury.

“We need to work together with Minister Kasukuwere to tackle the problems of LAs. Their revenue is coming from sale of land by the way it’s not theirs but it’s our land and they are not remitting the state is represented by central government and I have told Minister Kasukuwere. So through a collective effort with him we shall tackle the problem,” said Chinamasa.

The report indicates that LAs have not directed proceeds from the sale of land to enhancing service delivery but rather to recurrent expenditure.

During 2011-14 rapidly rising personnel costs, administrative and interest expenses caused LAs expenditure to grow by 132 percent from US$556 million to US$1.3 billion.

“Rising personnel costs have crowded out capital investment and no nonwage recurrent expenditures including spending on repairs and maintenance. Personnel costs dominate local government expenditures, accounting for an average of over 40 percent of LA spending since 2011, although the ministry of Local Government has set a target of 30:70 for personnel to non personnel spending. From 2011 just seven percent of LA expenditure was devoted to repairs and maintenance, including spending on council roads and transportation related services”.

In their defense the report said LAs were forced to hold onto the revenue as government was not executing the constitutionally mandated transfer of revenues to LAs.

“While the constitution states that at least five percent of national revenues should be allocated to LAs, actual intergovernmental transfers do not always reach this level. Most LAs now raise the majority of their own revenue internally through various fees, levies, fines, permit and license charges, as well property taxes and asset sales.”

However, Chinamasa said government will only allocate the constitutionally mandated revenue to LAs that show a sound record of competent financial management.

“The five percent allocation cannot be pumped into a poorly managed entity so first there is need to clean up the mess in municipalities. In well managed municipalities minister Kasukuwere and I have given them borrowing powers”.

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