Reported by: The Agency Media.
Date: 5th March 2025.
Lusaka, Zambia.
The Minister of Local Government and Rural Development, Hon. Gary Nkombo, has officially launched the ZIPAR Local Authorities’ Debt and Arrears Report in Lusaka. The report provides a comprehensive assessment of the financial challenges confronting Zambia’s local governments, shedding light on the historical evolution of municipal debt and the regulatory frameworks influencing financial management at the local level.
Delivering his keynote address, Minister Nkombo underscored the critical role of financial sustainability in advancing Zambia’s decentralization agenda. He highlighted that shifts in governance policies, fiscal constraints, and historical challenges have significantly impacted the financial health of local authorities, hampering effective service delivery.
“Financial distress, particularly the rising burden of pension arrears and unpaid taxes, threatens the stability of our Local Authorities. If left unresolved, these financial challenges will continue to hinder service delivery and stall local development. The New Dawn Government remains steadfast in its commitment to strengthening revenue mobilization and financial management to ensure a more efficient and decentralized governance system,” said Hon. Nkombo.
To mitigate these challenges, the government has introduced a range of strategic reforms, which include:
- Devolution of Key Functions: Thirteen functions have been transferred from various ministries to Local Authorities, with corresponding financial resources to support implementation.
- Direct Treasury Transfers: Sector funds are now directly transferred from the treasury to district sector grant accounts to enhance timely financial disbursements.
- Expansion of Fiscal Capacity: All Local Authorities have been declared Ratable Areas, enabling them to generate more revenue through property rate collection.
- Amendments to the Local Government Equalisation Fund Act: The revised Act allows councils to utilize their full allocation without previous restrictions, enhancing their financial independence.
- Automation of Revenue Collection: The government is fast-tracking the use of the Government Service Bus (GSB) to digitize revenue collection, reduce leakages, and improve financial accountability.
The ZIPAR report further identifies critical areas for improvement, including:
- Aligning recruitment with available resources to prevent unsustainable wage bills.
- Enhancing digital payment systems to minimize revenue losses.
- Developing a robust debt-tracking mechanism to improve financial oversight and restructuring.
In collaboration with key stakeholders, the government is committed to implementing clear debt restructuring frameworks and reinforcing financial governance to ensure that Local Authorities meet their obligations while maintaining essential service delivery.
Hon. Nkombo extended his appreciation to ZIPAR, the United Nations Children’s Fund (UNICEF), and all stakeholders who contributed to the study. He reaffirmed the government’s commitment to enacting reforms that will enhance financial stability, governance, and sustainable development at the local level.
“With a clear vision, strong policies, and collaborative efforts, we can build financially stable Local Authorities that will effectively serve the people of Zambia and drive national development,” he concluded.
The Agency.