Liquidity Crisis and Service Delivery in Zimbabwe Local Authorities

The cash shortage in Zimbabwe local authorities has now reached unprecedented levels. With local authorities failing to pay salaries and allowances as expected and creditors are accumulating. This situation has developed because revenue collections are low, traditional sources of revenue have gone dry and Government has also stopped its assistance to local authorities. The liquidity crisis has had a negative effect on service delivery. There is no-more service being offered by local authorities and the single major reason is liquidity.

There is a deterioration of services provided by local authorities. The local authorities are pointing at poor cash flows as the root cause of the problem. Financial shortages have become a common cry in Zimbabwe local authorities. Though some scholars blame other issues like Ahwoi blamed issues such as high rates of corruption, gross abuse of council property, high redundancy and staff turnover for problems experienced by local authorities. 

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However the Zimbabwe Institute associated the diminishing quality of service in Zimbabwe local authorities to the deteriorating macroeconomic situation. This paper tries to link service delivery and the liquidity crisis in Zimbabwe local authorities. Considering the role played by the cash shortages in Zimbabwe local authorities. Local authorities are failing to pay their staff and a number have in the recent past resorted to retrenchments. Some of the retrenched workers have not been paid their severance packages for more than a year now.