Local Government Investment Conference 2017
Keynote Address by Hon. P. A. Chinamasa
Minister of Finance & Economic Development
Republic of Zimbabwe
Harare International Conference Centre
7 – 9 August 2017
1. A very good morning to you all.
2. I wish to express my sincere appreciation to the Urban Councils Association of Zimbabwe hosting this important Local Government Investment Conference, 2017.
3. Let me also thank my colleague Minister, Cde. S. Kasukuwere for inviting me to give the Keynote Address this morning. I am extremely happy to be part of this important gathering.
4. I am always reminded of the Maslow’s Hierarchy of Needs Theory every time issues to do with housing, infrastructure development and public service delivery are discussed. These are basic needs that we hold dear to our hearts. Our Local Authorities are central to the delivery of these basic social services. It is unethical to deprive people of these physiological needs!
5. It is, therefore, befitting that the Urban Councils Association of Zimbabwe is hosting this event where I strongly believe that topical issues affecting the sector will be discussed, and more importantly how to attract investment into housing and infrastructural development for the benefit of Zimbabweans.
6. Investments in supporting infrastructure that includes electricity, water, sanitation, telecommunications and public transport is critical.
7. The importance of well-maintained infrastructure cannot be over-emphasized. Let us not leave our infrastructure to collapse and hope to resuscitate it. It is both costly and difficult to restore collapsed infrastructure!
8. I will spend the next few minutes talking about 3 issues:
• Issues facing our Local Authorities – largely drawing from the World Bank (June 2017) report;
• Measures to restore sustainability of Local Authorities; and
• Framework for housing development in Zimbabwe.
Issues facing Local Authorities
9. The main challenges facing Local Authorities include:
• Rising debt burden due to unsustainable cost structures;
• Limited capacity to collect revenues efficiently;
• Limited capacity to effectively manage finances;
• Employment costs, that are consuming the largest share of Local Authorities’ budgets;
• Low levels of spending on operations and maintenance – leading to a decline in service delivery; and
• Heavy reliance on the sale of assets including land as the main source of revenue.
10. The issues that I have highlighted make the Local Authorities’ financial position very weak. This is an unpleasant position that makes it difficult for you [Local Authorities] to attract investments, raise credit and even collect rates from the public.
11. This takes me to our expectations as Government so that Local Authorities:
• Are able to deliver quality service to the public;
• Become an attractive destination for investment capital; and
• Become sustainable.
Restoring sustainability of the Local Authorities
12. Local Authorities should never forget that their role is to provide reliable, affordable and quality service to our people and not enriching a few individuals! Government, therefore, expects Local Authorities to comply with the Directive by the Ministry of Local Government, Public Works and National Housing that I will restate:
• 30% of the budget – employment costs; and
• 70% of the budget – should go towards service delivery.
13. I am pleased that some Councils and Municipalities have started complying with the said Directive. I implore the non-compliant Authorities to follow suit.
14. Government will assist those Local Authorities whose finances are in order and currently being well-managed to invest in infrastructure development. We stand ready to give them Borrowing Powers duly signed by Treasury and; the Ministry of Local Government, Public Works and National Housing.
15. The Ministry of Local Government, Public Works and National Housing has already submitted to Treasury a list of Local Authorities who incurred losses due to the cancellation of outstanding bills. The matter is currently under consideration, and we remain very positive that we will find practical ways to assist the affected Authorities.
Framework for housing development
16. Government expects an orderly delivery of the services by the Local Authorities. We will not tolerate any “chaos or confusions” that are deliberately caused by the Officials who would want to benefit themselves or their associates.
17. I would want to reiterate the Government’s position on “zero tolerance to land barons”. This position should be upheld by all of us! All land in Zimbabwe is state land, and no one is allowed to embark on any development without proper authority.
18. We [Ministries of Local Government, Public Works and National Housing; Lands and Rural Settlement as well as Treasury] have agreed on a template for housing development to guide infrastructure development in both urban areas and rural business centres whose main pillars are that:
• The Ministry of Local Government, Public Works and National Housing will provide land for housing development in urban and municipality boundaries;
• Ministry of Lands and Rural Settlement will gazette some of the land in rural areas as part of Growth Points and Rural Service Centres; and
• All developments regardless of whether they are in urban or rural areas shall be granted freehold title.
19. We have also agreed that UDCORP will be appropriately capacitated so that it can service land in urban, growth points and rural service centres.
20. Infrastructure Development Bank of Zimbabwe (IDBZ) will be our lead financial advisor. We are considering issuing a Housing Infrastructure Bond in order to mobilise the required resources for the development of housing infrastructure including supporting onsite and offsite infrastructure.
21. Government will not tolerate unplanned developments. The template we have developed will ensure that there is adequate onsite and offsite infrastructure.
22. We are also encouraging investment in renewable energy particularly solar power systems for lighting and heating for new developments. Any excess power can be sold to the national grid.
23. Let me also reiterate the importance of qualified and skilled people in any organisation. I would, therefore, want to encourage you to revisit your human capital recruitment, development and retention programmes. You need skilled and qualified people!
24. I thank you for your kind attention, and enjoy the rest of this conference.