BULAWAYO City Council is seeking a $13,2 million loan from BancABC to fund the rehabilitation of its ageing sewer reticulation system and for the purchase of refuse removal trucks.
Council received no objections from Bulawayo residents after flighting adverts in May announcing its intention to apply for borrowing powers from Local Government minister Ignatius Chombo.
According to a report by council’s finance director Kempton Ndimande, the local authority chose BancABC for its favourable borrowing terms compared to other financial institutions.
“Unlike loans for working capital where interest rates are high with a short-term tenure, the loans for infrastructural development should be of medium to long term with low interest rate,” reads part of the report contained in the minutes of the finance and development committee.
“Offers were invited from the financial institutions to finance the whole project or part thereof at an expectant interest rate of less than 15% per annum and a tenure of at least five years.
“Three financial institutions namely BancABC, CABS and ZB Bank offer loans for sewerage rehabilitation and loans for the purchase of refuse removal vehicles while Ecobank and FBC Bank offer loans for the purchase of refuse removal vehicles only,” the report added.
“BanABC offers the full loan amount of $13 261 600 for sewerage rehabilitation whereas CABS and ZB Bank offer $3 500 000 and $2 000 000, respectively.
“The cost of loan for sewerage rehabilitation and loan for the purchase of refuse removal vehicles from BancABC is the lowest as compared to loans from other financial institutions.”
Council recommended that “the loan offer from BancABC of $13 261 600 for sewerage reticulation and $1 500 000 for the purchase of refuse removal vehicles on the terms stated in their offer letter be accepted”.
A recent report by council’s water and future supplies committee blamed water pipe bursts on ageing infrastructure, revealing that in April alone the local authority received over 1 000 reports of water pipe bursts.
Council has been struggling to maintain its timetable for refuse removals due to lack of vehicles, resulting in residents
disposing litter at illegal dumpsites.
Refuse collection in the eastern suburbs is supposed to be done weekly and fortnightly in the western suburbs.