Masvingo swims in debt

THE Masvingo City Council is in arrears of $4 billion with its creditors such as the
Local Authority Pensions Fund (LAPF), with the city attributing the increase to
liquidity challenges.
According to the minutes of Finance and General Purposes Committee, the local
authority is in arrears of $4 billion with ZIMRA (PAYE and AIDS LEVY) topping the
list with $2,4 billion followed by LAPF with $1 billion.
The city fathers owe the National Social Security Authority (NSSA), ZIMDEF,
Standards Levy $295 million, $107 million, $70 million respectively.
“The Committee considered the report of the Finance Director on the creditors
balances as at September 30, 2023. It was reported that Council payables continued
to increase owing to liquidity challenges and economic hardships experienced in the
economy. Council has agreed payment plans with major creditors such as LAPF,
ZIMRA, ZESA and ZIMDEF,” reads part of the Finance minutes.
“It was reported that a daily stop order arrangement with the Local Authorities’
Pension Fund (LAPF) was agreed to discharge of the debt. During the month of
September $40,7million was deducted through the stop order facility. A payment
plan was agreed to pay the amount owing to ZIMRA, and the payment plan needs to
be observed to avoid garnish orders, this payment plan requires Council to clear off
the outstanding debt amounting US$ 20,000 and $ 307 million.”
Meanwhile, the local authority was able to pay its September net salaries despite
cash flow challenges and adverse effects of inflationary pressures.
“With regards to salaries, it was reported that the gross salary bill for July 2023 was
$2, 319,918,266.92 for permanent employees and $ 434, 278, 325.68 for contract
employees which amounted to $ 2,754,196,592.60. For August 2023, the total gross
salary bill was $2,194,040,457.51 and the increase in the gross wage bill was partly
attributed to exchange rate movements since employee salaries are exchange rate
indexed.”
“The net salaries for the months of August and September 2023 were $1, 207, 008,
272.10 and $1,317,972,159.48 respectively. Net salaries paid in US$ amounted to
US$ 121 266 in August 2023 and US$118 637 for September 2023. It was noted that
all staff net salaries for the period ending 30 September 2023 were paid in full.”
Failure by Masvingo to remit pension funds results in workers going for retirement
being frustrated and at times going home empty-handed after years of service.
Local authorities constitute the bulk of institutions that are not remitting to pension
funds contributions they would have deducted from employees according to a 2022
list published by the Insurance and Pensions Commission (IPEC).

Employers deduct pension contributions and are required to remit the same to
pension funds but a significant number of employers have not been doing so
resulting in pension contribution arrears of $5,3 billion as at March 31, 2022.
IPEC has over the years raised concern over continued failure by some sponsoring
employers to remit pension contributions to their respective pension funds to the
detriment of pension scheme members.