CITY OF MUTARE

MAYOR’S PARLOUR

Civic Centre

P.O. Box 910, Mutare, Zimbabwe

Phone: (020) 64412    Fax: (020) 62656

Email: grange1992@hotmail.com

April 15, 2010

The democratically elected Council of Mutare, representing the residents and stakeholders of the City, is committed to conducting all Council business in a transparent and accountable manner with full public disclosure. In order to maximize development potential, attract donor assistance and partnerships and combat corruption, the Council is seeking to raise funds for an in-depth professional audit of Municipal activities. Council is appealing to stakeholders and other interested parties to assist with financial contributions in order that the activities of Council can be widely scrutinized. Appropriate measures will be taken to correct the lack of accountability that still prevails and which is of concern to Council and residents alike. This objective should be achieved without depriving the City of public funds required for service delivery.

The extent and ultimate success of the audit will depend on the funds raised. As the Mayor of the City, I am appealing to all stakeholders to contribute no matter how small the amount. Every contribution counts. The audit findings will be made public and the full sum raised accounted for in press advertisements and public meetings. A separate bank account has been opened by Kingdom Bank Mutare Branch; City of Mutare Donor Funds Account number 32108563.

Council has resolved to source quotes from at least three professional accounting firms to achieve this end.

The priorities are; a donor funds audit with report to contributing donors, a forensic financial audit of a specific area of concern to Council, an audit of land sales and procedures and a human resources audit. If we can raise US$ 200 000 from this appeal the City will establish a strong platform of reform which will enable Council to serve Residents and Partners with renewed integrity.

Councillor Brian James

Mayor

City of Mutare

Speech Given by the Mayor to the Local Businessmen on the 19^th May 2009

Incentives for Business.

I am honoured to be invited to this notable event and even more honoured to be allocated a short time to address you.

I have been asked to speak specifically on incentives that Council can offer to Mutare business. This is a very important theme because it coincides with both the short and long terms goals of Council and gives me a perfect opportunity to tell you what we are doing. These initiatives directly present the Mutare business community with an enormous challenge and a commensurate balance of opportunity. The incentives we offer, I hope, will become more evident as I proceed.

 The philosophy of Council is to build a city that uplifts the quality of life for all its residents. By virtue of what Mutare offers, once this council achieves its goals, it is anticipated that it will attract a positive skills migration and new investment which will stimulate business.

Business incentives cannot be addressed in isolation. Firstly I need to cover what we are doing to uplift the stature of our city and to make Mutare an attractive destination for new investment, yes read competition. New investment brings new growth and opportunity and, inevitably, competition. Markets thrive on competition and we intend to offer plenty of it through the uplifting of our City.

We have the best growth opportunities in Zimbabwe right here in Mutare. Our abundant clean water supply and proximity to the port of Beira together with a recoverable infrastructure, provides us with a competitive advantage.  The restoration of our decaying infrastructure is taking more time than we had anticipated. Meanwhile your Council is not sitting waiting for better days contemplating the meaning of life but this in itself can offer private public partnerships.

I would point out though, lest we forget, up until the beginning of February this year we were obliged to bill in Zimbabwe dollars and accept Zimbabwe dollar cheques thirty days in arrears. How insane is that? Not a single business in Mutare, I would venture to add, would trade in such an untenable environment. It is pertinent to note that the November bills, which were paid during December and early January, did not even purchase one box of stationery to print statements when the funds were finally recovered. 

Yes, one full month of Council billing did not buy one box of stationery, in real terms. Some of the very same businesses, now looking to Council for incentives, demanded hard currency in advance. They then used meagre hard currencies to pay their municipal charges, whilst laughing all the way to the bank taking full advantage of the unique Zimbabwe economy whereby the burning of a few dollars created false value. Regrettably Council were at the bottom of this giant pyramid scheme and paid the full price when it all crumbled, inevitably.

Impacting further on Council revenues, whenever the zeroes were chopped off our residents did not even bother coming in to pay the fractions of dollars that they owed. We were not permitted to revalue like other business and we were left, literally, counting our pennies.

Anyway, that is history. What about now and the future? The dollarization has not only created huge opportunities but also short term challenges. It is easy to value a tin of baked beans in US$ terms. We had no history to refer to or a tangible commodity to trade.

 We wanted to make the charges as reasonable as possible but still generate the revenue urgently required to pay our staff and the balance to be used on infrastructural restoration. This was an arduous exercise and our February and March bills have just been finalised and distributed. We now ask our residents to come forward and pay their accounts as soon as possible.

The good fortune that Council enjoyed was the return of water from the clutches of ZINWA, in March of this year. When Mutare lost its water to ZINWA we were deprived of half of our revenue. The City suffered greatly as a result.  It was evident that this ministry did not see the need to return any funds from our water to our City or sadly even to maintain the water reticulation infrastructure for the whole period of their tenure.

Now that we have water back, we have set our charges significantly lower than the National average that ZINWA used in their tariff structure. This has enabled us to look forward to the much needed spare funds for capital refurbishment. There is an enormous vacuum of opportunity to increase revenue from water. We are only billing some 60% of the capacity due to the aging and crumbling water reticulation systems. We have a plan though!!! A project document is being prepared for external support in this area and this project fits all the criteria for development aid.

In keeping our charges as low as possible we are endeavouring to create a competitive cost structure to attract business to Mutare as I have alluded to earlier.

The method that we used for setting the commercial and industrial rates will interest you. After many fruitless attempts to determine a reasonable tariff formula, we decided to look at the last time the economic fundamentals made sense. This period was 1998 and 1999 when devaluation and inflation were low double digits and ran in tandem, as elementary economic theory dictates they should. We converted the average municipal charges for the two years to US$, using the average exchange rates of that period. Then, on account of production capacity being so much lower than it was then, we discounted this by at least 50% to derive a fair and reasonable tariff. That was the best interim measure we could determine until the dollar, in the Zimbabwean context, sets its own value.

You will have noticed that your first dollarised bills had no opening balances. The first significant hard currency Council is collecting is right now. This is not a reflection of an inadequate acumen but rather of extreme interference possibly aimed at forcing us to fail by imposing unsustainable trading conditions. I bet there are no other businesses in Zimbabwe who can honestly claim they have survived as well as we have on Zimbabwe dollars until NOW.

We have to manage largely from our own resources balancing the chicken and egg scenario and handing the criticism constructively knowing that we are doing the best we can, with the limited resources that are mostly being generated solely from our little city. I realise that all the utility companies are competing for your limited dollars. Please do not put us into the same mental space that the electricity and telephone tariffs have occupied.

We have done everything we can to keep our water and other charges to an absolute minimum. Please assist in our endeavours by paying promptly, that way you will very quickly see that we can and intend to deliver on our promised targets.

Now to the nitty gritty of business incentives in our new look City. We have established a transparent and service orientated administration as we progress with service delivery from the rates hall all the way through to the busy grass-cutters that are now a feature of our city.

Local businesses will be invited to tender transparently for equal opportunity. Where possible we will keep funds generated by the city for the city. This will not be possible if local charges are not competitive. Tenders will be scrutinised by our tender board but the opportunity to compete will be there.

Council in the past has been seen as a centre of exploitation with shady deals benefiting only an elitist minority and some of those entrusted with the welfare of the City, further rendering the Council bankrupt and devoid of the most basic of services.

Whilst numerous contracts will have to be revisited in the interests of Council and all stakeholders, this is not intended as a witch hunt but purely as a correction of previous deviations from normal best business practice. It is from the experiences of the past that we will map the future. If we learn from our mistakes we can turn them into opportunities.

Our endeavours and strategic transparency has made us attractive to a wide group of partners and donors. There is enormous interest in using Mutare as a flagship city.

Financial assistance is slow at the moment, but in the area of health, water treatment and technical support we have been very fortunate. The community has also played a huge part in keeping the City afloat and volunteers have virtually sustained the viability of council. This brings me to another point. It would be wonderful if wider business participation could supplement the efforts of a few loyal citizens. Ask not what the City can do for business but what business can do for the City. The benefits will be considerable and the efforts richly rewarded.

Development assistance is mostly still in the pipeline, particularly in the areas of transport, plant and equipment. These potential projects are stalled because of the inability of the GPA principals to finally conclude their agreed obligations and objectives. The reasons why, are the subject of lengthy debate however I will leave it to the floor to decide where the blame lies. Negotiations with funding and technical partners are ongoing and largely successful despite the political impasse.

We have embarked on our master plan survey. Initial funds have been successfully raised and assistance will be provided by a group of universities and other associated groups with funding from one of our loyal partners. This opportunity provides all Mutare citizens, particularly the business community, to contribute to the strategic development of our city. It is an opportunity for everyone to think outside the box and come forward with project proposals and specific infrastructural support programs. The short term vision is aimed at particularly for the development of the Sakubva bus terminus and vending areas, stretching to the stadium and swimming pool areas, and all related transport and support facilities, needless to say the list is endless.

A proposed cultural strip stretching from behind the Museum to the Mutare Hall can also be included in this plan. This incorporates the library, the museum, the theatre, the cinemas and the community hall. We are looking for proposals for a host of projects that we would like Mutare business to be part of.

The master plan also intends to solve the problem of transport in that we will pursue the building of the “by-pass” road from the border post behind the main industrial area and past Feruka to the Harare road. It is envisaged that this will incorporate the Grand Reef aerodrome as our city airstrip. This airstrip, as everyone knows, is far more suitable for our growing city than Perrems.

Housing is probably the single biggest area that will stimulate the economy and boost business. Council intends to incorporate energy saving measures in any new housing developments and introduce suitable energy saving programs for existing structures.

Whilst the concept of stand alone homes is appealing for the minority there is still ample room for larger scale housing projects which will be another opportunity for Mutare business. Enquiries have been made in this field and the aim is to attract the local finance houses to come aboard and help complete the cycle.

The purpose of the overall master plan is to prioritise development projects which support the final objective of the plan. Development will start as soon as the plan is initiated. We have given ourselves until the end of January 2010 to complete this initiative. A few of the major projects, such as water distribution infrastructure and roads refurbishment, will require assistance from Central Government and development agencies. A wide network of support has been established and very positively received by the donor community, in principle of course. Whilst a great deal of the ground work has been covered, the final result awaits a long overdue political solution.

It is hoped that outstanding GPA conditions will be concluded promptly and that the prevailing delays are only temporary. We all anticipate celebrating final fulfilment and the recognition that we deserve so that we can start showing you the fruits of our labour.

If the business community, having heard and absorbed the theme of this speech, are still expecting  immediate incentives and tariff relief, under the present circumstances we are unable to deliver those to the satisfaction of the majority.

We want our local businesses to thrive but business must be competitive and not expect contracts and special favours by virtue of being local. It is imperative that any business, pursuing an opportunity to serve council, prepares for a thorough and transparent tender review. Times have changed, the global village has taken occupation of Mutare, are you ready to take up the challenge.  Our mantra is competitive transparency in the awarding of tenders. If local companies are to be awarded contracts under a new dispensation it will be because they are competitive and the service and price offered is deserving of the award.

Businesses need to prepare for the urgency that will kick start as soon as the environment is conducive. We are not interested in hearing from companies that want cash up front or cash deposits so that raw materials can be secured. It is imperative that businesses secure adequate working capital support to provide the services that will be abundantly demanded. The freeing up of the economy has given consumers massive advantages of choice and price.

Council will be no different from any other consumer so be prepared to sharpen your pencil to compete.

It is our intention to settle bills promptly and not spend what we cannot afford. The businesses that have been generous enough to take a chance on Council recently have not regretted this. The new Councillors see many Mutare business people coming to the Civic Centre offering decent credit terms. These innovative businesses see the writing on the wall and are responding to the new challenges and opportunities that dollarisation offers.

We in Council are guided by three main pillars of principal, mainly Democracy, Transparency and Accountability.  If we succeed in these we provide the most basic incentive to do business in the City.  Much has been said about corruption and anti-corruption measures being put in place, and yes this Council, like all others in the Country are under intense pressure to succumb to these temptations.  This Council, Ladies and gentlemen, intends to stand above these old practises and will not tolerate interference of this nature.  Change has arrived and only positive and constructive change will attract the development assistance we so desperately need.  Until then we will not sit back but will be proactive, live within our means and be creative.  Speaking of which, should the time come when there might be a realisation that no meaningful financial support is going to materialise.  The challenge to Zimbabweans themselves would be to invest in their own progress.  How would you view the chance to invest in national or City bonds?  Much has been said about blocked funds overseas, monies banked in outside bank accounts, no external investor would want to take the plunge in Zimbabwe if we ourselves do not wish to test the waters.

Thank you very much for taking the time to listen to The Councils visions of our City’s future. Are there any questions?

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