Municipalities’ debts rise to K1bn

LOCAL authorities’ debt has risen to about K1 billion as at December 31 last year, with urban councils being the major contributors to the staggering liability, Government has disclosed.
Ministry of Local Government and Housing permanent secretary Stanford Msichili said the debt, which has accrued over the last five years, comprises non-remittances to Local Authorities Superannuation Fund (LASF), retirement benefits, suppliers and utility services.
Mr Msichili said in an interview on Friday that there is need for concerted effort by both the local authorities and the central government in addressing the choking debt.
“Bluntly speaking, local authorities would have been declared bankrupt if they were not public in nature…The debt needs to be examined and find the way forward in addressing it, and the first line should be the local authorities themselves,” he said.
Mr Msichili said if left unaddressed, the debt will undermine the decentralisation programme that Government is undertaking, as local authorities will be unable to operate effectively.
He said there is need for strict financial controls by councils to avoid incurring further debt.
Mr Msichili also said there is need for local authorities to undertake income-generating projects that will keep the councils afloat.
He said the establishment of the local government equalisation fund (LGEF) will also go a long way in stabilising the financial position of councils in the country.
In the 2015 budget, Government announced intentions to set up a LGEF to provide a stable, buoyant and predictable source of funds to supplement local government revenue with an initial investment of about  K586 million.
On how much local authorities are owed, Mr Msichili said the public owes councils about K200 million in unpaid property rates and other fees over the last five years.

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