FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTING
RESEARCH TOPIC
An investigation into the funding gap on undertaking capital projects (a case study of
Kadoma City Council: Year 2009-2011)
Submitted By
TINASHE JOB MPAMBAWASHE
REG NUMBER:
R091199X
A research project submitted in partial fulfilment of the requirements of Bachelor of Commerce
Accounting Honours Degree. (Visiting)
30 MARCH 2012
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Gweru; Zimbabwe
APPROVAL FORM
The undersigned certify that they have supervised the student Tinashe Job Mpambawashe’s
dissertation entitled An investigation into the funding gap on undertaking capital projects(A
case study of Kadoma City Council : Year 2009 – 2011), submitted in Partial fulfilment of the
requirements of the Bachelor of Commerce in Accounting Honours Degree at Midlands State
University.
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DATE
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CHAIRPERSON
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EXTERNAL EXAMINER
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DATE
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
RELEASE FORM
NAME OF STUDENT:
TINASHE JOB MPAMBAWASHE
DISSERTATION TITLE: An investigation into the funding gap on undertaking capital
projects (A case study of Kadoma City Council 2009 – 2011)
DEGREE TITLE:
Bachelor of Commerce in Accounting Honours
Degree
YEAR THIS DEGREE GRANTED: 2012
Permission is hereby granted to the Midlands State University
Library to produce single copies of this dissertation and to lend or
sell such copies for private, scholarly or scientific research
purpose only. The author does not reserve other publication rights
and the dissertation nor may extensive extracts from it be printed
or otherwise reproduced without the author’s written permission.
SIGNED---------------------------------------------------------------------------------------------------------
PERMAMENT ADDRESS:
1914/15 Nyandoro Street
Rimuka
Kadoma
DATE:
30 March 2012
DEDICATION
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Dedicated to my parents, my late father Joseph Mpambawashe and Locardia Mpambawashe
who have been a pillar of strength and installed in me the importance of education.
ABSTRACT
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
The study aimed at investigating into the funding gap on undertaking water and capital projects at
Kadoma City Councils for the period 2009 to 2011. It sought to find out the reasons why Kadoma
City Council was failing to get long-term borrowing for its water and sewer capital projects, the
requirements by long-term lenders, the restrictions on Kadoma City Council borrowing, to find out
whether they were transparency and accountability problems and what should be done to bridge the
financing gap.
The study showed that Kadoma City Council was failing to get long-term loans because of the
following reasons, unpredictable policies of the government, poor corporate governance, high
default risk due to low cashflows and lower revenue collection, lack of bankable projects, poor
reputation, the accounts for KCC were not up to date and they had not been audited for 2010 and
2011. The researcher recommended the use of public-private partnerships and use of reserves to
address the funding gap.
ACKNOWLEDGEMENT
Firstly I would like to thank God for everything, for his love, mercy, guidance, protection and
opportunity he has given me to study my degree program and let me get this far. I wish to express
my gratitude to all who made this research possible:
Special mention goes to Mr Kazembe, my lecture and supervisor for his invaluable guidance
and unwavering support throughout the project research.
I am also grateful to my family which has been behind me. I cannot fully express my gratitude
for standing by me through thick and thin. You were always there for me, gave me a shoulder to
cry on and encouraged me to be strong, never to lose hope and always aim high.
I am also greatly indebted to Kadoma City Council staff for giving me this wonderful
opportunity to work with them and for the help they gave me be it guidance, knowledge, advice,
expertise, constructive comments and inspiration.
LIST OF TABLES AND FIGURES
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Page
Table 1.1 (Funding gap)-------------------------------------------------------------------
2
Table 1.2( Borrowing powers)------------------------------------------------------------ 2
Table 1.2 (Capital budget)----------------------------------------------------------------
3
Table 3.1 Sample size---------------------------------------------------------------------- 25
Table 4.1.1 (Questionnaire response rate) ---------------------------------------------
32
Table 4.1.2 ( length of time with the organisation)-----------------------------------
33
Table 4.1.3 (Respondents level of education) ----------------------------------------
33
Table 4.1.4 (Incidents KCC defaulted loan repayments) ----------------------------
34
Table 4.1.5 (Funds used for recurrent expenditure) ----------------------------------
35
Table 4.1.6 (Why KCC is failing to get borrowing)----------------------------------
36
Table 4.1.7 (Unpredictable policies in Zimbabwe)-----------------------------------
37
Table 4.1.8 (Requirements before borrowing)----------------------------------------
39
Table 4.1.9 (KCC needs the approval of the Minister before borrowing---------
40
Table 4.1.10 (Requirements by long-term lenders)----------------------------------
41
Table 4.1.11 (Requirements by national and international markets)--------------
42
Table 4.1.12 (Effect of government control on KCC borrowing)-----------------
43
Table 4.1.13 (KCC can only borrow after approval of residents)-----------------
44
Table 4.1.14 (Transparency and accountability problems)------------------------
45
Table 4.1.15 (Methods of improving transparency and accountability)--------
46
Table 4.1.16 (The current methods of financing are inadequate)------------------
47
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Table 4.1.17(Financing using municipal bonds)-------------------------------------
48
Table 4.1.18 (Methods of financing water and sewer capital projects)-----------
50
Table 4.2. (Interview response)-------------------------------------------------------
51
Table 4.3.1 (City of Kadoma Update on PSIP projects)----------------------------
54
Table 4.3.2 (Review of Audited accounts)-------------------------------------------
55
Figure 4.1.1 (Incidents KCC defaulted loan repayments) --------------------------
34
Figure 4.1.2 (Funds used for recurrent expenditure)--------------------------------
35
Figure 4.1.3 (Why KCC is failing to get borrowing)-------------------------------
36
Figure 4.1.4 (Unpredictable policies in Zimbabwe)--------------------------------
38
Figure 4.1.5 (Requirements before borrowing)-------------------------------------
39
Figure 4.1.6 (KCC needs the approval of Minister before borrowing )--------
40
Figure 4.1.7 (Requirements by long-term lenders)--------------------------------
41
Figure 4.1.8 (Requirements by national and international markets)-----------
42
Figure 4.1.9 (Effect of government control on KCC on borrowing)-----------
43
Figure 4.1.10 (KCC can only borrow after approval of residents)-------------
44
Figure 4.1.11(Transparency and accountability problems)----------------------
45
Figure 4.1.12 (Methods of improving transparency and accountability)-----
46
Figure 4.1.13 (The current methods of financing are inadequate)-------------
47
Figure 4.1.14(Financing using municipal bonds)---------------------------------
49
Figure 4.1.15(Methods of financing water and sewer capital projects)-------
50
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Approval form-------------------------------------------------------------------------------------
i
Release form---------------------------------------------------------------------------------------
ii
Dedication-----------------------------------------------------------------------------------------
iii
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Abstract-------------------------------------------------------------------------------------------
iv
Acknowledgement-------------------------------------------------------------------------------
iv
TABLE OF CONTENTS---------------------------------------------------------------------
viii
CHAPTER ONE: INTRODUCTION---------------------------------------------------------
1
1.0 Introduction------------------------------------------------------------------------------------
1
1.1Background of the study---------------------------------------------------------------------
1
1.2 Statement of Problem-----------------------------------------------------------------------
3
1.3 Research objectives--------------------------------------------------------------------------
4
1.4 Main Research Question-------------------------------------------------------------------
4
1.5 Sub-research Question---------------------------------------------------------------------
4
1.6 Significance of the study-------------------------------------------------------------------
4
1.7 Delimitations---------------------------------------------------------------------------------
5
1.8 Limitations of the study-------------------------------------------------------------------
5
1.9 Definition of terms-------------------------------------------------------------------------
6
1.10 Summary-----------------------------------------------------------------------------------
6
CHAPTER TWO: LITERATURE REVIEW-------------------------------------------
7
2.0 Introduction--------------------------------------------------------------------------------
7
2.1Capital project definition----------------------------------------------------------------
7
2.2 Reasons local authorities fail to get long-term borrowing-----------------------
7
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
2.3 Requirements before getting borrowing--------------------------------------------
8
2.4 Municipal borrowing restrictions----------------------------------------------------
10
2.5 Transparency and accountability over use of funds-----------------------------
13
2.6 Methods of reducing the funding gap----------------------------------------------
15
2.7 Summary---------------------------------------------------------------------------------
22
CHAPTER THREE: RESEARCH METHODOLOGY--------------------------------------
23
3.0 Introduction---------------------------------------------------------------------------------------
23
3.1Case study Research design--------------------------------------------------------------------
23
3.2 Population----------------------------------------------------------------------------------------
24
3.3 Sample design-----------------------------------------------------------------------------------
24
3.4 Types of Data------------------------------------------------------------------------------------
25
3.5 Research Instruments--------------------------------------------------------------------------
27
3.5.1 Questionnaires---------------------------------------------------------------------------------
27
3.5.2 Interviews--------------------------------------------------------------------------------------
28
3.6 Data Collection Procedures------------------------------------------------------------------
29
3.7 Validity and reliability of research instruments-----------------------------------------
30
3.8 Data Presentation------------------------------------------------------------------------------
30
3.9 Summary----------------------------------------------------------------------------------------
31
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS ----------------------
32
4.0 Introduction-----------------------------------------------------------------------------------
32
4.1Questionnaire analysis-----------------------------------------------------------------------
32
4.2 Interview responses--------------------------------------------------------------------------
51
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
4.3 Secondary Data-------------------------------------------------------------------------------
57
4.4 Summary---------------------------------------------------------------------------------------
55
CHAPTER FIVE: SUMMARIES CONCLUSION AND RECOMMENDATIONS
56
5.0 Introduction-----------------------------------------------------------------------------------
56
5.1Summary---------------------------------------------------------------------------------------
56
5.2 Major Findings-------------------------------------------------------------------------------
57
5.3 Conclusion------------------------------------------------------------------------------------
58
5.4 Recommendations---------------------------------------------------------------------------
58
5.5 Further areas of research-----------------------------------------------------------------
59
REFERENCES---------------------------------------------------------------------------------
60
Letter of Introduction--------------------------------------------------------------------------
63
Appendix I: Interview Guide----------------------------------------------------------------
64
Appendix II: Questionnaire-----------------------------------------------------------------
65
Appendix III Letter of approval-----------------------------------------------------------
68
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
CHAPTER ONE
INTRODUCTION
1.0
Introduction
This chapter of the research provided an overview of the study, background and significance of
the study. Also under discussion in the section were the research objectives, assumptions,
delimitations, limitations, and definition of terms.
1.1 Background of the study
Section 290 of the Urban Councils Act Chapter (29:15) states that Urban Councils may with the
consent of the Minister responsible for Local government and the Minister responsible for finance
raise the necessary funds by issuing stock, bonds, debentures, or bills or from any other source not
mentioned in the Urban Councils Act.
According to Dr Maponga in the Water Diarrhea outbreak report (2010: 4) in Kadoma half of the
population has access to clean water with the other 50 percent ailing to access clean water. Kadoma
City has had recurrent problems with watery diarrhea outbreaks since 2002. Each of the suburbs
in Kadoma have water problems, half of the residents have access to tap water. The City Council
has no finance for the refurbishment of the water pump stations and to upgrade the pipes. Also in
most suburbs there are sewer blockages. The sewer system cannot accommodate a large
population. In 2007, an outbreak of rotavirus caused the death of 34 children. A cholera outbreak
in 2008 and 2009 left about 6000 people affected with 127 reported deaths. Another cholera
outbreak in 2010 affected 123 people and caused 4 deaths. This is a big challenge to Kadoma City
Council providing every resident with clean and safe water.
By law, the provision of Urban infrastructure in Zimbabwe rests with Local Authorities. The Urban
Councils Act Chapter (29:15) of 1995 states that Local Authorities are government entities charged
with the co-ordination and delivery of basic urban services, regulation and direction of services
and effective governance of the city.
According to the Special Council meeting of 7 February 2011 Kadoma City Council made
submissions for emergency intervention on water infrastructure development to the Ministry of
Water and Infrastructure Development of about US$3 500 000 but it only got about US$250 000.
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Table1.1 funding gap
Investment need
US$3 500 000
Confirmed funding
US$250 000
Funding gap
US$3 250 000
Source: KCC Special Council Meeting 7 February 2011
The Full Council meeting of November 2011 consisted Councillors and management resolved to
borrow money. The Sunday Mail of 18 December 2011 gave notice to the general public about the
general purposes for which moneys need to be borrowed and the amount required to be borrowed.
The article had the following information: Notice is hereby given that in terms of section 290(2)
(a) of the Urban Council’s Act Chapter (29:15) Kadoma City Council has resolved to borrow the
following amounts for specified projects hereunder
Table 1.2 Borrowing powers
Project
Amount (US$)
High Density stand servicing
7 550 000
Factory shells
25 000
Water Augmentation
25 000 000
Water distribution line upgrades
1 416 000
Sewer lines upgrades
1 100 000
Sewer Treatment works refurbishment
1 900 000
Firefighting Equipment
300 000
Road resurfacing
3 000 000
Plant and Equipment
2 100 000
New bus terminus
600 000
Total
42 991 000
Source: The Sunday Mail 18 December 2011
The residents were given 21 days to air their views, opinions or input concerning the amounts
which need to be borrowed and then an application is done to the Ministry of Local government
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
and National Housing. According to the Sunday Mail article, an amount of about US$42 991 000
is needed for capital projects. However, to this day no funding has been received for these capital
projects.
The Finance Committee Chairman Mr. Jochore in the 2010 budget review stated that the 2010
capital budget non performed because Council did not receive any loans and there was a huge
shortage of cash resources to fund revenue contribution to capital.
According to the Finance Committee Chairman statement in the 2011 Kadoma City Council
budget presentation, most planned capital projects did not take off due unavailability of funds. The
major factor was lack of financial resources due to nonpayment of bills. The collection rates
averaged 30 %. The Finance Chairman made the following presentation:
Capital Budget
Description
Amount
%
External funding
9 000 000
84. 9
Revenue collections
1 200 000
11.3
Self financing
400 000
3.8
Total
10 600 000
100
Confirmed funding
Nil
Funding gap
10 600 000
Source: Kadoma City Council 2011 Budget
1.2 Statement of problem
Kadoma City Council has limited financial resources to undertake capital projects such as
upgrading of water and sewer reticulation, maintenance of roads, unless it gets external assistance.
This trend is common to all Urban Councils in Zimbabwe. Most Local Authorities are not able to
undertake capital projects. The challenge is then finding ways of financing the capital projects in
the face of increasing constrained budgets, restrictions on borrowing and limitations on increases
of revenue.
1.3 Research Objectives
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
The main objective is to examine the funding gap on the undertaking of water and sewer capital
projects
Specific objectives
1. To identify the reasons Kadoma City Council is failing to get long-term borrowing for
its water and sewer capital projects.
2. To identify the requirements when Kadoma City Council wants to borrow.
3. To identify the borrowing restrictions on Kadoma City Council.
4. To establish the whether there have been transparency and accountability problems of
funds
for what and sewer and what can be done to improve.
5. To identify methods that can be used to bridge the funding gap on undertaking capital
projects.
1.4 Main Research Question
Why is there a funding gap when undertaking water and sewer capital projects?
1.5 Sub Research Questions
1. Why is Kadoma City Council failing to get long-term borrowing for its water and sewer
capital projects?
2. What are the requirements by lenders before lending to KCC?
3. What are the borrowing restrictions on KCC?
4. Have there been transparency and accountability problems of funds for water and sewer
capital projects and what can be done?
5. What methods can be used to bridge the funding gap on undertaking capital projects?
1.6 Significance of the study
1.6.1 To the researcher
The research is in partial fulfillment of the Bachelor of Commerce Honours Degree in
Accountancy. In addition it developed the ability to research and resolve hospital problems
since key research skills were developed in the researcher.
1.6.2 To Midlands State University
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
The researcher will provide knowledge for other scholars. The institution also earns good
reputation if the findings and recommendations prove to be fruitful to the institution.
1.6.3 To the institution
Through implementing recommendations by the research, the institution would be in a
position to bridge the funding gap on undertaking capital projects.
1.7 Delimitations
 The research focused on the assessment of the funding gap on undertaking water and
sewer capital projects.
 The research study was only confined to Kadoma City Council.
 The research covered the period between the year 2009 and 2011.
1.8 Limitations

Time constraints
The time available for the research was not adequate to fully exhaust the various aspects
of the research under normal hours. Thus the researcher had to work after hours.

Financial constraints
Stationery and transport costs contributed much to the constraint. Some information from
the internet was not accessible for it needed subscriptions. Therefore the researcher had to
forgo some of his needs and channeled the funds towards the research expenses.

Confidentiality
Some respondents were not eager to give confidential, important information for the sake
of preserving the Kadoma City Council’s image. However this was not a major problem
since the writer was part of the organization’s staff and used minutes and circulars to
circumvent this limitation.
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
19 Definition of terms and abbreviations
Capital project – is a long-term investment project requiring relatively large sums to
acquire, develop, improve, or maintain a capital asset (such as land, buildings, dykes,
roads). In other words a capital project is a project that helps maintain or improve a City
asset, often called infrastructure.
Funding gap – the amount of money needed to fund the ongoing operations or future
development of a business or project that is not currently provided by cash, equity or debt.
Accountability - is the principle that individuals, organizations and the community are
responsible for their actions and may be required to explain them to others.
Creditworthiness - refers to the eligibility of an entity to borrow money based on their
credit history, in the opinion of the lender or on the basis of a credit scoring system.
Alternatively, it can refer to the creditor’s measure of an individual or organisation’s ability
to pay back a loan. Creditworthiness is also a condition of the market itself.
UCA – Urban Councils Act
MLGNM – Ministry of Local Government and National Housing
KCC- Kadoma City Council
1.10
Summary
This chapter provided background information to the study, statement of the problem and
did spell out the objectives to the study, delimitations, limitations and definition of terms.
The next chapter presented the literature review.
CHAPTER TWO
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter reviews a selection of the existing literature on the funding gap on undertaking capital
projects. It will look at what other writers say about the topic. These findings will guide the
researcher and lead to a greater understanding on the topic and related studies.
2.1 Definition of Capital project
According to www.portlandonline.com/omf/index.cfm?a=30079 (06/02/12, 3:30 pm) a capital
project is a project that helps maintain or improve a City asset, often called infrastructure.
According to the business dictionary at www.businessdictionary.com/definition/capitalproject.htm (06/02/12, 3:40 pm) a capital project is a long-term investment project requiring
relatively large sums to acquire, develop, improve or maintain a capital asset.
2.2 Reasons why Local Authorities fail to get long-term borrowing
According to www.en.wikipedia.org/wiki/Municipal_bond (25/02/12,4:22pm) many municipal
water and sewerage utilities in developing countries face enormous challenge in obtaining the
capital they need to improve their existing service and invest in increased water and sewerage
capacity. Even in localities where financing is potentially available from external private sources,
many utilities are unable to take advantage of such financing, since they do not meet the requisite
conditions demanded by capital markets, that is they are not” bankable”. To address this challenge,
utilities need to pursue innovative reforms that will put them on the path of transformation and
lead to conditions required to access external capital.
According to Dirie (2005:23) local government in developing countries have very limited
borrowing powers, even to finance investment projects with a long time span. A medium or longterm loan is justified for the financing of investments that will yield benefits in the future, in terms
of services to the citizens and revenues (user payment or charges) to local government. On the
other hand, too many and large loans might lead to insolvent local government and unstable
financial situations. The challenge is to strike the right balance. In addition, Dirie (2005) states that
lack of creditworthiness has been one problem why local authorities fail to get funding for their
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
capital projects. According to Gertze, Hunter, Groot, Kruger, Manlongu, Matsebulu (2008:38)
creditworthiness refers to the eligibility of an individual or entity to borrow money based on their
history, in the opinion of the lender or on the basis of a credit scoring system. Furthermore, Dirie
(2005) states that local authorities fail to get long-term borrowing for their capital projects because
of the strict regulations and cumbersome procedures.
According to the Zimbabwe Institute (2005) with a reduction in government grants and dwindling
own resources; local authorities are struggling to provide services to their constituencies.
Consequently, capital development funds are often diverted to cater for recurrent expenditures. In
other cases, even down funds are illegally viremented to pay for running expenses.
2.3 Requirements before getting borrowing
According to the Urban Councils Act (Chapter 29:15) a council shall establish one or more capital
development funds from which moneys shall be issued as advances repayable to such fund for the
purposes of financing capital expenditure or the creation or replacing of assets appropriate to the
function or functions for which the capital development fund was established.
According to Marumahoko (2011:17 ) section 290 (1) of the Urban Councils
Act Chapter
(29:15) of 1996 Act sets out a framework within which urban councils may source external funding
for expenditure programmes. Urban local authorities are only permitted to borrow in order to
finance capital projects subject to restrictions set out in the Act. The list of capital projects for
which they may borrow include the acquisition and construction of permanent works or
undertakings; acquisition of immovable property or any interest therein; the making of advances
authorized by this or any other Act; the payment of compensation; the liquidation of the principal
monies owing on account of any previous borrowings; the relief of general distress occasioned by
some calamity in the council area; the acquisition of plant, equipment, vehicles and the like.
Marumahoko (2011) argues that Section 290 of the 1996 Act outlines criteria which all urban
councils must meet before they are granted borrowing powers. The discretion to grant borrowing
powers is the joint prerogative of the Ministers of Local Government and of Finance. A council
resolution must be in place before the borrowing power application is presented to the Minister of
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Local Government for his approval. The resolution to borrow money must have been approved by
the majority of the councillors in a full council meeting, without the Mayor having used his casting
vote. The borrowing power application should furthermore state upfront the projects and amount
of money to be borrowed and whether any objections raised by members of the public have been
resolved. The application, which is then forwarded to the Minister of Local Government, must be
accompanied by objections received from the public.
Also Marumahoko (2011) argues that the law authorizes the Minister to use his discretion to
approve part of or the entire application for borrowing powers. In addition, the 1996 Act grants
authority to the Minister to set conditions and restrictions on the period of validity of the borrowing
powers. The legislated institutions from which borrowing powers can be obtained are the State,
the Local Authorities Pension Fund, a municipal provident fund, a municipal medical aid fund,
sick fund and another local authority. Further, with the authority of the Ministers of Local
Government and of Finance, funding can be raised from the issue of stock, bonds, debentures and
bills.
Furthermore Marumahoko (2011) argues that the regulation of sub-national borrowing entrenches
the intrusive control of urban local authorities by local government.
According to Gertze, Hunter, De Groot, Kruger, Manlongu, Matsebulu (2008:38)
in the
Municipal context creditworthiness is crucial in line with decentralization of service delivery
responsibilities, Municipalities are increasingly responsible for infrastructure investment and need
to access financing for infrastructure improvements from banks or bond markets without relying
on sovereign guarantees. Gertze and others argue that there are various ways to measure
creditworthiness which include:

Cashflows
By subtracting all of a potential borrower’s normal expenditures from its normal revenue,
a lender decides whether there will be enough left over to comfortably repay the required
loan.
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)

Credit history
A lender looks for evidence of a willingness and history of repayment in full and on time.

Current indebtedness
A potential lender looks at the ratio of current debt to income to determine whether a
borrower can reasonably handle another obligation without significantly increasing the risk
of default.

Credit ratings
Gertze et al (2008) argue that while financial institutions ultimately take their own
decisions on a borrower’s ability to repay a loan, these decisions are informed by credit
ratings. Each rating firm uses its own methods and grading system. There are two
approaches to enhancing creditworthiness, one is to employ “tricks” that can improve credit
ratings or reduce the cost of a debt instrument. The other approach is to undertake longterm institutional and fiscal reforms to improve the financial sustainability of the
organization. If a municipality does not yet believe it is ready for a public credit rating, it
may opt to obtain a “shadow” (one that is not made public) to understand the strengths and
weaknesses of its present position and the steps needed to improve creditworthiness.
2.4 Municipal borrowing restrictions
According to Marumahoko (2011:19) the Constitution of Zimbabwe does not recognise local
government, nor does it extend any form of autonomy to urban local authorities. The problem is
compounded by the fact that the Urban Councils Act does not guarantee the financial autonomy
of urban councils. The provision of revenue powers in the 1996 Act was not sufficient as the
sources of revenue assigned to urban councils are not self-sustaining. In the absence of highyielding sources of revenue, urban councils have struggled with their service delivery mandate.
Marumahoko (2011) argues that the revenue autonomy of urban local authorities to decide on
alternative financing options is restricted. Although the Act is the basis for the statutory powers of
urban councils to raise revenue, central government regulation through the Minister of Local
Government is a major constraining factor. Urban councils are assigned weak revenue powers,
leading to a wide gap between revenue and expenditure figures. In addition Marumahoko argues
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
that the use of conditional grants is increasingly associated with the central government agenda to
influence the pattern of expenditure of urban councils. Inflexible conditions attached to grants are
at variance with the tenets of good intergovernmental financial transfers. However, due to the fact
that intergovernmental financial transfers are not provided for in the Urban Councils Act, urban
councils have no legal basis for challenging central government to honour its obligation.
Also Marumahoko (2011) argued that urban local authorities enjoy a restricted discretion on
expenditure. The determination of urban councils’ expenditure powers is a function which is
subject to central government approval. Unless authorised by the Minister of Local Government,
all expenditure is carried out within the framework of a hard budget. The Act grants the Minister
of Local Government excessive powers to regulate the funding arrangements of urban local
governments. The Minister may set aside council decisions on financing arrangements even where
they were informed by valid public consultation processes. Some expenditure cannot be executed
without the Minister’s approval. In some instances the Minister may suspend the expenditure
powers of councils and opt to direct expenditure processes from the centre.
Furthermore Marumahoko (2011) argues that although there is statutory provision for sub-national
borrowing, it cannot be exercised without the approval of central government. The “right to
borrow” is at the behest of the Minister of Local Government who may approve which institution
an urban council should borrow from. The right to borrow is further granted under the specific
condition that such borrowing be used for funding capital expenditure and not recurrent
expenditure. In addition, the Minister has the final word on the size of the loan sought.
According to the Canadian Federation of Municipalites (2008) some provinces and territories
restrict the type of funds to which municipal governments may have access and the procedures
through which they may be borrowed. Provincial and territorial statutes place various types of
borrowing restrictions on municipalities. The following are examples of some of the main
borrowing restrictions faced by municipalities across Canada with respect to long-term debt.
(a) Municipal finance authority or municipal finance corporation
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Municipalities located in certain provinces are required to borrow money through a central
borrowing agency for their province called the municipal finance authority or municipal
finance corporation. In those cases, Federation of Canadian Municipalities executes a loan
agreement with both the municipality and the municipal finance authority or municipal
finance corporation.
(b) Lower-tier municipalities
Lower-tier municipalities located in certain provinces are required to borrow money
through their regional municipality. In those cases, Federation of Canadian Municiaplities
lends money, earmarked for the lower-tier municipality, to the regional municipality,
which then gives the money to the lower-tier municipality. Federation of Canadian
Municipalities will execute a loan agreement with both the lower-tier municipality and the
regional municipality.
(c) Bylaw
Municipalities located in certain provinces and territories must pass a bylaw to authorize loans.
This requirement typically applies to borrowers from most provinces and territories.
(d) Municipal debentures
Municipalities located in certain provinces cannot sign a simple long-term loan agreement with
a lender and obtain the loans funds. Instead, they must issue municipal debentures in exchange
for the loan funds. A municipal debenture is an unsecured long-term debt instrument. While
borrowers must normally pledge an asset as collateral to borrow money, municipalities are able
to borrow money through municipal debentures without pledging any assets because of their
credit worthiness.
(e) Other restrictions
There are many other requirements that must be met by certain municipalities that wish to incur
long-term debt, including registering the bylaw at the land registry office, obtaining the
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approval of the qualified voters, obtaining ministerial approval and borrowing only from a list
of prescribed lenders.
2.5 Transparency and Accountability over the use of funds
Leibig (2008:49) stated that when looking at municipal borrowing in South Africa, borrowing had
a positive impact on accountability and transparency. According to Leibig (2008) there are four
processes that lead to improved accountability and transparency which are external assessment,
tendering, reporting and “sitting together”.
External assessment – A credit rating increases transparency towards lenders and citizens, it
lowers credit costs and it supports efforts to improve financial management capacity. External
assessments such as ratings are publicly available and thereby increase transparency. A rating
sheds light on aspects such as a municipality’s financial position, its quality of management. It is
not borrowing itself that increases transparency, but action taken that ideally precedes a
municipality’s engagement in borrowing. Leibig (2008) argues that in South Africa, 25 of 283
municipalities have a credit rating, of which CA-Ratings, the local credit agency, rated 23
municipalities. Firstly, a rating lowers credit costs since it pools information which a lender needs
to get anyway. Secondly, a rating is used by some municipalities as a management tool. These
municipalities use the information contained in the rating as a performance measurement tool for
themselves to improve their quality of work, particularly their financial management.
Tendering process – tendering practices for municipal borrowing in South Africa guarantee a
high level of transparency when a municipality takes out a loan. For long-term liabilities
municipalities usually advertise a request for proposal 21 days in advance making the procurement
of the loan a very transparent process.
Reporting and monitoring – via reporting and monitoring, sub-national borrowing mainly
increases the accountability of a municipality towards its lenders under certain circumstances.
Reporting and monitoring can also improve a municipality’s transparency and accountability
towards its citizens.
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According to Gertze et al (2008) bank loans involve only two parties while in bond issue a diverse
pool of investors is involved in bonds. Bond issues involve underwriters, credit rating agencies,
trustees and the general public. They create an obligation for greater accountability and
transparency on the part of the municipality. All the stakeholders and investors demand up to date
knowledge of the financial affairs of the municipality and the issuer is required by debt disclosure
regulations of the Municipal Finance Management Act to obtain an annually renewable credit
rating. In addition Gertze et al (2008) stated that the regulations are aimed at improving
transparency to protect investors. For example, investors will know the extent to which changes in
local taxes and services will affect the servicing of the bond repayments.
Furthermore Gertze et al (2008) states that for a successful bond issue, a municipality must have a
good revenue collection and revenue growth rate, as this serves as an indicator of the ability of a
municipality to meet its bond repayment obligations.
According to Hann (2011) the aim of a capital project fund is to ensure that the local authority
raising funds for a project is accountable for the use of those funds. The purpose of the capital
projects fund is accountability to the persons who have provided the funds for the capital project,
who may be local taxpayers or the purchasers of bonds in connection with the project. Only certain
specified earnings are included in the capital projects fund and only certain capital payments and
expenses may be made out of the fund. Certain expenses that may be incurred in the course of a
project would need to be made from a general fund rather than the capital projects fund if those
expenses are not authorized to be made from the capital projects fund.
2.6 Methods of reducing the funding gap
Municipal Bonds
According to Billand (2006) municipal bonds are an improvement over bank borrowings, as the
municipality creates a debt instrument with term and conditions that meet its needs and the needs
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of the investor. The interest rate and repayment period are negotiated. The use of funds and
collateral requirements can meet the needs of both the municipality and the investors. Upon
completion of the economic and financial viability analysis, credit rating and the legal agreements,
a bond prospectus is prepared. The purpose of the prospectus is to inform investors of the risks
they undertake by purchasing shares in the bond transaction. Thereafter the debt instrument is sold
to investors.
In addition to a market rate of return, investors also gained because their businesses derive
economic benefits from the water improvements. In addition to the financial incentives, individual
investors were attracted because they personally benefit from increased water supply. Credit
enhancements are essential for municipal bonds. They provide comfort to investors by providing
layers of protection against non-payment by the borrower. The typical credit enhancement is a
reserve fund. The first layer is an initial
deposit equal to 1.25 times the annual debt service
payments held by a trustee. The municipality pledges a stream of income to ensure that the fund
is always at 1.25 times the annual payment. If the municipality is unable to make subsequent
payments into the reserve fund, a second layer of credit enhancement is often used. The second
layer is an intercept of cash transfers from higher levels of government to the municipality.
According to www.en.wikipedia.org/wiki/Municipal_bond (25/02/12, 4:22pm) a municipal bond is a
bond issued by a city or other local government, or their agencies. Potential issuers of municipal
bonds includes cities, counties, redevelopment agencies, special purpose districts, school districts,
public utility districts, publicly owned airports and seaports, and any other governmental entity (or
group of governments) below the state level. Municipal bonds may be general obligations of the
issuer or secured by specified revenues. In the United States, interest income received by holders
of municipal bonds is often exempt from the federal income tax and from the income tax of the
state in which they are issued, although municipal bonds issued for certain purposes may not be
tax exempt.
In addition according to the Wikipedia unlike new issue stocks that are brought to market with
price restrictions until the deal is sold, municipal bonds are free to trade at any time once they are
purchased by the investor. Professional traders regularly trade and retrade the same bonds several
times a week. The two basic types of municipal bonds are:
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
General obligation bonds - Principal and interest are secured by the full faith and credit
of the issuer and usually supported by either the issuer’s unlimited or limited taxing power.
In many cases, general obligation bonds are voter-approved.

Revenue bonds - Principal and interest are secured by revenues derived from tolls, charges
or rents from the facility built with the proceeds of the bond issue. Public projects financed
by revenue bonds include toll roads, water and sewage treatment facilities, hospitals and
subsidized housing.
Furthermore according to www.en.wikipedia.org/wiki/Municipal_bond (25/02/12, 4:22 pm)
municipal bonds are securities that are issued for the purpose of financing the infrastructure
needs of the issuing municipality. These needs vary greatly but can include schools and
highways, bridges, hospitals, public housing, sewer and water systems, power utilities and
various public projects.

According to Luis, George, Savage, Eggerth (2005) argue that another way to obtain financing
for capital investment is to raise funds from private investors through the issuance of bonds using
three financing methods : general obligation (GO) bonds, revenue bonds, or lease revenue bonds.
In each option, the community issues tax-exempt debt and guarantees repayment of debt with
credit of either the community or the projects revenues combined with any other guarantee or
insurance.
General obligation bonds - This type of financing utilizes the credit of the community as the
credit pledge. Principal and interest payments for GO bonds can either be made from tax revenues
or from the project’s revenues.
Revenue bonds - This type of bond is repaid from revenues generated by the project or system.
The bonds are secured by legal documents specifying the responsibilities of each participant, as
well as the flow of funds. According to www.mswmanagement.com/MSW/Articles/The_Econ
(22/03/12, 2:20 pm) revenue bonds were popular in the United States in the late 1980s and early
1990s for financing waste to energy facilities, where revenues were obtained through tipping fees
and sales of energy. If the bonds for a facility of this type are secured only by the project’s
revenues, they will command a higher interest rate.
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Lease revenue bonds - In this type of financing, a public entity or a specially formed non-profit
corporation issues tax exempt revenue bonds to finance a waste management facility. The facility
is then leased to the municipality. Securing for the bonds is provided by the lease between the two
entities.
According to Gertze et al (2008) municipal bonds are certificates of debt issued to raise funds. The
issuer of a bond promises to repay the bondholder (the investor) the principal debt and interest
(called a coupon) at a predetermined date. Municipal bonds can be ideal instruments to finance
large capital projects over several decades. Interest rate payments and the repayment period can
be negotiated by the issuer (the municipality) and the investors.
Case Study for Africa: Johannesburg’s Municipal Bond Issuance
According to Platz and Schroeder (2007:19) the example of the city of Johannesburg offers a
positive experience for generating the long-term financing needed for the provision of public
utilities. As a first step, the city established a treasury department, which took the initiative to issue
municipal bonds in order to raise long-term funding. Although the rating was initially low, it served
as a benchmark for improvements. According to the city’s treasurer, the following steps were
important in establishing the bonds: founding the city treasury; embarking on a study tour to
Mexico to learn about best international practice in municipal bonds; eliciting political support for
the move, and developing a ten-year financial plan that took into account inflation, interest rates,
tariff increases for municipal services, and mechanisms to secure cheap capital. Crucial steps
during the implementation phase were the appointing of advisers on the type and structure of the
bonds; the selection of both underwriters and guarantors ; road shows whereby investors witnessed
the establishment of new utility networks and distribution systems; and book building before the
bonds were put on the market. Both bonds were well received by the market, with the first being
1.5 times and the second 2.3 times oversubscribed. As a result, the financial standing of the city
improved dramatically.
Advantages of bonds
According to Leigland and Thomas (1999) Volume 16, issue 4 in the Journal on Municipal bonds
on www.tandfonline.com/doi/abs/10.1080/03768359908440110#preview (06/03/12, 2:30 pm)
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municipal bonds are sometimes viewed as a less expensive way of financing infrastructure than by
public-private partnerships (PPPs), or methods that maintain greater public control over projects
and service provision.
According to www.gobankingrates.com/.../bonds/advantages-and-disadvantages (06/03/12, 4:30pm )
the biggest advantage associated with investing in municipal bonds is the fact that they are usually
tax free. In other words, there is no need to worry about paying taxes on interest income.
Disadvantages of municipal bonds
According to Roos (2012) municipal bonds can be difficult if the issuer is a smaller municipality
like a rural county government.
Long term loans
According to Gertze, Hunter, De Groot, Kruger, Manlongu, Matsebula (2008:26) the principal
borrowing mechanisms for cities to finance infrastructure development are long-term loans .In a
loan, the borrower agrees to pay the lender according to a pre-arranged schedule, at a floating or
fixed rate of interest. These loans, typically issued by banks or public-sector lending institutions
are less complicated to administer than bonds. They also do not carry the high initial transaction
costs associated with bond issues, in South Africa, 73 percent of total local government debt. In
the broader region, such loans are quite low.
Loans versus bonds
According to Gertze, Hunter, De Groot, Kruger, Manlongu, Matsebula (2008:28) where lenders
are able to loan at very low interest rates, loans may be cheaper than bonds. But this is the
exception, not the rule. Internationally, most infrastructure investment is funded through bonds. It
pays to build relationships with bond markets over time because over the long term bonds become
cheaper than loans. Over time, the cost of capital is reduced. In South Africa, some issuers, such
as the Rand Water Board, have sold bonds since at least the 1920s and continue to do so today.
Public private partnerships (PPP)
According to Gertze, Hunter, De Groot, Kruger, Manlongu, Matsebulu (2008:28) public private
partnerships are one potential avenue to improve municipal service delivery and infrastructure
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development. These partnerships build on private-sector expertise and the ability of the private
party to raise debt and equity to finance large scale projects.
According to Simeon (2007:7) private sector participation is a proven strategy in the water sector
as demonstrated by the steady growth in the number of projects and by the diversity of new entrants
into this market internationally. Private participation can help when public sector reform is not
enough. A well-designed private participation arrangement will hold a private firm accountable
for its contribution to secure improvements and reward it for controlling costs and introducing a
businesslike approach to billing and collection. Providers of finance, such as banks and the bond
markets, may be more willing to put their money in a utility if they see it has a credible, commercial
management approach. Having a private firm run the utility is one way to provide that credibility.
Involving a private firm can make it easier to get finance for the water sector. Private firms are
able to manage many risks, such as (depending on the circumstances) billing customers properly,
controlling operating costs, and expanding networks. Citizens will continue to hold governments
accountable for the quality of their water services.
Public Private Partnerships (PPP) Study Paper
According to the study paperby Nguri (2009:8) the PPPs mode of financing municipal and LGs
projects has also become the practice in UK and Europe Generally (Kyvelou et al, 2006). This
practice is gaining momentum world over as has also been demonstrated in America (Arboleda et
al, 2006); China (Cao, 2009); and it is also beginning to take root in Africa. The PPP arrangements
are project specific and dependant on many factors such as public and private partners' skills,
capabilities, limitations, projects' characteristics. They can take different forms such as Build
Operate Transfer (BOT), Build Own Operate Transfer (BOOT), Leasing, Joint Ventures or
Operation and Management contracts.
Types of PPP Financing Suitable for Municipal Capital Projects
According to Palmer (2009) PPP type of financing models may include the following:
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Design-Build (DB): Under this model, the municipal authority contracts with a private partner to
design and build a facility in accordance with the requirements set by the authority. After
completing the facility, the government assumes responsibility for operating and maintaining the
facility. This method of procurement is also referred to as Build-Transfer (BT).

Design-Build-Maintain (DBM): This model is similar to Design-Build except that the
private sector also maintains the facility. The public sector retains responsibility for
operations.

Design-Build-Operate (DBO): Under this model, the private sector designs and builds a
facility. Once the facility is completed, the title for the new facility is transferred to the
public sector, while the private sector operates the facility for a specified period.

Design-Build-Operate-Maintain (DBOM): This model combines the responsibilities of
design-build procurements with the operations and maintenance of a facility for a specified
period by a private sector partner. At the end of that period, the operation of the facility is
transferred back to the public sector. This method of procurement is also referred to as
Build-Operate-Transfer (BOT).

Build-Own-Operate-Transfer (BOOT): The municipal authority grants a franchise to a
private partner to finance, design, build and operate a facility for a specific period of time.
Ownership of the facility is transferred back to the public sector at the end of that period.

Build-Own-Operate (BOO): The government grants the right to finance, design, build,
operate and maintain a project to a private entity, which retains ownership of the project.
The private entity is not required to transfer the facility back to the government.

Design-Build-Finance-Operate/Maintain (DBFO, DBFM or DBFO/M): Under this
model, the private sector designs, builds, finances, operates and/or maintains a new
facility under a long-term lease. At the end of the lease term, the facility is transferred to
the public sector.
Reserves
According to Luis, Diaz, George, Savage, Eggerth (2005) they argued that reserves also are known
as renewal funds and usually are used for investments in equipment replacement or to extend the
service capacity of existing equipment.
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According to Kitchen (2006) financing capital projects through funds set aside for capital spending
is the reverse of financing through borrowing. A” capital levy “ usually a few percentage points of
the local property tax is set aside and accumulates in interest earning accounts segregated from
general revenues. These reserves may be earmarked for general capital projects or for specific
projects.
According to the Urban Councils Act (Chapter 29:15) a council may establish one or more revenue
reserves for general or specific purposes. There shall be appropriated to the revenue reserves such
amounts as the council may determine to transfer from accumulated revenue surpluses or from
current revenue.
Donations
According to Luis, Diaz, Geroge, Savage, Eggerth (2005) municipalities in developing countries
often have access to a variety of organizations that can donate funds, human resources or
equipment for environment protection and water and sewer and solid waste management. The
organizations can be national or international. Some of them are willing to assist in solving a
specific problem without any conditions, while others impose rather stringent and sometimes
costly conditions.
Borrowing
According to Kitchen (2006) short term borrowing may be used to finance capital expenditure or
to finance an unexpected deficit in the operating budget. Long-term borrowing is restricted to
financing capital expenditures. For infrastructure whose benefits accrue to future residents,
fairness, efficiency and accountability is enhanced if these projects are financed by borrowing with
repayment coming from property tax revenues and user fees paid by future beneficiaries. For
example borrowing is appropriate for fire and police infrastructure, recreational facilities,
transportation infrastructure and water and sewer systems.
2.7 SUMMARY
This chapter looked at what other writers and authorities said about the funding gap on the
provision of capital projects. The next chapter tackles on methodology.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter looks at the research design or strategy developed, the target population, sample,
research instrument, types of data (primary and secondary data), validity and reliability of the
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instruments employed by the researcher, the limitations to methodology, data presentation and
validity.
3.1 CASE STUDY RESEARCH DESIGN
According to Shuttleworth (2008) a case study is an in depth study of a particular situation rather
than a sweeping statistical survey. It is a method used to narrow down a very broad field of research
into one easily researchable topic. Whilst it will not answer a question completely it will give
indications and allow further elaboration and hypothesis creation on a subject. A case study is “an
empirical inquiry that investigates a contemporary phenomenon within its real life context using
multiple sources of evidence” (Noor, 2008:1602)
Case Study Research: Advantages
According to Robson (2007) a case study research has the following advantages:

Studying a single case (or a small number of cases) gives the opportunity to carry out a
study in depth, which can capture complexities, relationships and processes.

It strongly encourages the use of multiple methods of collecting data, and of multiple data
source.

The boundaries of the study (for example the amount of time involved and context covered)
are flexible, and can often be tailored to the time and resources you have available.

It is less artificial and detached than traditional approaches such as experiments and
surveys.

It can be used for a wide variety of research purposes and for widely different types of
cases
Case Study Research : Disadvantages
According to Robson (2007) the case study research has the following disadvantages:

The credibility of generalizations from case studies is often challenged. It depends on a
different logic from that familiar in surveys.
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
Case studies typically seek to focus on situations as they occur naturally and hence observer
effects caused by the presence of the researcher can be problematic.

The flexible nature of case study design means that you have to be prepared to modify,
depending on the results of your involvement. It can become difficult to keep to deadlines.

The continuing, though erroneous, view that case study is necessarily a ‘soft option’, may
lead to it not being acceptable in some course regulations.
3.2 POPULATION
According to Castillo (2009) a research population is generally a large collection of individuals or
objects that is the focus of a scientific query.
Castillo (2009) argues that a research population is also known as a well-defined collection of
individuals or objects known to have similar characteristics. All individuals or objects within a
certain population usually have a common, binding characteristic or trait.
Furthermore Castillo argues that there are two types of population in research, target and accessible
population. Castillo (2009) defined target population as the entire group of individuals or objects
to which researchers are interested in generating the conclusions. Castillo (2009) defined
accessible population in research to which the researchers can apply their conclusions.
3.3 Sample design
According to Cherry (2012) a sample is a subset of a population that is used to represent the entire
group as a whole. When doing research, it is often impractical to survey every member of a
particular population because the sheer number of people is simply too large. In order to make
inferences about characteristics of a population, researchers can use a random sample.
3.3.1 Sampling techniques used were:
Convenience sampling
According to the Wikipedia on www.wikipedia.org/wiki/sampling_(statistics) (20/03/12, 4:07pm)
a convenience sampling is a type of non probability sampling which involves the sample being
drawn from that part of the population which is close to hand, that is , a population is selected
because it is readily available and convenient.
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Judgmental sampling
According to Westfall (2008) in judgmental sampling the person doing the sample uses his or her
knowledge or experience to select items to be sampled. According to Kumar (2011:207)
convenience sampling is based upon convenience in accessing the sampling population.
Table 3.1: SAMPLE SIZE
Population
Sample
%
size
HODs
10
5
50
Lower level managers
14
11
78.57
Other staff( finance dept, engineering
16
10
62.5
40
26
65
dept)
Total
3.4 TYPES OF DATA
3.4.1Primary data
Kelly (2005) defines primary data as data that the researcher collects using such methods as direct
observation, surveys and interviews. Primary data can be relied on because the researcher knows
where it came from and what was done to it. According to Duval (2005) primary data collection
is necessary when a researcher cannot find the data needed in secondary sources.
Advantages of primary sources of data
 Data is more accurate and reliable as it is obtained direct from the subjects.
 The data is relevant to the problem at hand as it is modifiable to meet the requirements or
objectives.
 Tends to be cheaper when the intended population is concentrated around the same place
or when a sample is chosen to represent the whole population.
Disadvantages of primary sources of data
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 It takes a lot of time to gather data, which is, designing the questionnaires, and
administration of the actual survey.
 It tends to be expensive where the entire population is spread around the country.
3.4.2 SECONDARY DATA
Steppingstones (2004) defined secondary data as information gathered for purposes other than the
completion of the research project. Secondary data is classified in terms of its source – either
internal or external or in house data. In house data is secondary information acquired with the
organization where research is being carried out. External secondary data is obtained from outside
sources. When compared to primary data, secondary data has a number of advantages which
include the following:

It is inexpensive to collect and process.

Volumes of information may be available which gives the researcher a wider and more
appropriate choice.

The data is from reputable and authoritative sources and hence verification is ensured.

Since the data is readily available, less time was spent compiling the information.
Disadvantage of secondary data

Some data may not be relevant to the problem at hand.

Data may be outdated.

Data may be in a different format or units than is required by the researcher.

Secondary information pertinent to the research topic is either not available or is only
available in insufficient quantities.
3.5 RESEACH INSTRUMENTS
This shows the tools used to gather relevant data surrounding the funding gap on undertaking
capital projects. The researcher employed two data collection tools which are interview, and the
administration of questionnaire.
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3.5.1 Questionnaires
A questionnaire is a research instrument consisting of a series of questions and other prompts for
the purpose of gathering information from respondents. Although they are often designed for
statistical analysis of the responses, this is not always the case. Mellenbergh (2008:221-236)
A set of questions were designed by the researcher so that respondents could answer at their own
time. The respondents included the staff in the Finance department and engineering department.
Advantages of questionnaires
 It was convenient to the top management who could not be interviewed because of their
busy schedules.
 Due to anonymity that was afforded by the questionnaires, which has enabled the
respondents to answer frankly as there was no fear of victimization.
 The data obtained was easy to understand, analyse and interpret as the results could be
quantified.
Disadvantages of questionnaires
 Some of the questions are not easy to understand and there is no-one close by to explain.
 The respondent’s answers were limited to the researchers expected answers of yes or no
and the respondents could not answer in any way different.
 Respondent had sometimes a general lack of interest thus giving false answers or giving a
third party to answer who might not be the right person.
Type of questionnaire
According to Wikipedia on www.en.wikipedia.org/wiki/Likert_scale (16/03/12, 2:16pm) the
Likert scale questionnaire is a psychometric scale commonly used in questionnaires, and is the
most widely used scale in survey research, such that the term is often used interchangeably with
rating scale even though the two are not synonymous. When responding to a Likert questionnaire
item, respondents specify their level of agreement or disagreement on a symmetric agrees-disagree
scale for a series of statements. Thus the scale captures the intensity of their feelings.
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In addition the Wikipedia states that a Likert is a scale usually of approval or agreement used in
questionnaires. The respondent is asked to say whether for example they strongly agree, agree,
disagree or strongly disagree with some statement.
According to www.home.comcast.net/.../Marketing%20Assignment/sales/Likert%20Scales.ppt
(20/03/12, 3:45pm) a Likert scale questionnaire has the following advantages and disadvantages
Advantages of Likert scale

Responses are gathered in a standard way.

Relatively quick to collect information.

Can be collected from a large portion of a group.

Easy to use

Gives participants a wide range of choices which may make them feel more comfortable
to respond.
Disadvantages of Likert scaling–

Participants may not be completely honest which may be intentional or unintentional.

Participants may base answers on feelings toward survey or subject

Many answer according to what they feel is expected of them as participants.

Scale requires great deal of decision-making

Can take a long time to analyze the data
3.5.2 Interviews
According to www.wikipedia.org/wiki/interview (29/03/12, 3;20pm)an interview is a
conversation between two people (the interviewer and interviewee) where questions are asked by
the interviewer to obtain information from the interviewee.
Much emphasis was placed on the interviews because more information concerning the topic at
hand was obtained from the company staff responsible for financing and carrying out capital
projects.
Advantages of personal interviews
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
Since they are more conversational in nature, the respondents were encouraged to talk
about the subject rather than provide yes or no answers to specific questions.

The researcher was able to solicit for more information through the use of open ended
questions.

The researcher managed to clarify some questions which were viewed as ambiguous.

Direct communication and verbal responses as well as gestures which enabled the
researcher to seek clarification on some grey areas concerning the topic by asking follow
up questions.
Disadvantages of personal interviews

Although it was an effective method of fact finding, they were more time consuming for
the researcher, who had several to conduct and therefore it was expensive.

Most respondents seemed to provide biased responses which they thought would please
the researcher

The quality of the data depends upon the quality of the interaction.
3.6 DATA COLLECTION PROCEDURES
3.6.1 Appointment for interviews
The researcher made appointments of two days in advance. This enabled the staff to schedule their
time for the interviews.
3.6.2 Administration of the Questionnaires
All the questionnaires were hand delivered and collected. The time frame for completing them
varied from one day to two weeks depending on how busy the respondent was. However, top
management would take up to three weeks due to their tight work schedule.
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3.7 Validity and reliability of research instruments
According to Leedy and Ormrod (2005:31) the validity and reliability of your measurement
instruments influences the extent to which you can learn something about the phenomenon you
are studying and the extent to which you can draw meaningful conclusions from your data.
Reliability
A research instrument is appropriate when it produces accurate, reliable and dependable outcomes.
Reliability is achieved if a measure of methods and questions are used to measure and assess field
of interest. Reliability is defined as “the consistency with which a measuring instrument yields a
certain results when the entity being measured hasn’t changed” (according to Leedy &Ormrod
2005:31)
Data validity and presentation
Validity refers to a researchers’ ability to “draw meaningful and justifiable inferences from scores
about a sample or population” (Creswell, 2005:600)
Validity refers to the extent to which the values provided by an instrument actually measure the
attributes it is intended to measure. The main types of validity are content, criteria related, construct
and concurrent validity.
3.8 Data Presentation
Is a skill set that seeks to identify, locate, manipulate, format and present data in such a way as to
optimally communicate meaning and proffer knowledge. Data Presentation weds the science of
numbers, data and statistics in discovering valuable information from data and making it usable,
relevant and actionable with the arts of data visualization, communications, organizational
psychology and change management in order to provide Business Intelligence solutions with the
data scope, delivery timing, format and visualizations that will most effectively support and drive
operational, tactical and strategic behaviour toward understood business (or organizational) goals
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3.9 Summary
This chapter provided a background of how the research was conducted. It outlined the research
design, the target population, sample, research instruments, and types of data, concepts of validity
and reliability and limitations of the methodology used.
Chapter 4 looks at data presentation and analysis.
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CHAPTER 4
DATA PRESENTATION AND ANALYSIS
4.0 Introduction
This chapter seeks to present data that was collected from respondents through the use of
questionnaires and interviews. Presentation and analysis of data is given under this chapter. The
chapter presents and analyses the findings of the research on the funding gap on undertaking capital
projects at Kadoma City Council between 2009 and 2011.Presentations of results are in form of
tables, charts, graphs and an outline of interview responses. The last paragraph is the summary,
which highlights major issues raised and gives focus of the following chapter.
4.1 QUESTIONNAIRE ANALYSIS
Questionnaire Responses
The analysis set out below is based on the questionnaires returned. The responses are tabulated as
shown on table 1 below
Table 4.1.1 Questionnaire Response
Department Questionnaires
Returned
Questionnaires
Targeted
Questionnaires
Not Returned
Population
Returned
%
Finance
10
00
10
100
Engineering
10
01
11
90.91
20
01
21
95.24
Total
Ninety-five percent of the targeted population managed to respond to the questioners. The
responses were made up of Finance department and Engineering department which had 100% and
90.91% respectively resulting in a percentage average of ninety-five percent of total response of
target population.
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Q1 a) Length of time with the organisation
The table 4.1.2 below shows data collected regarding the length of time spent with the organisation.
Table 4.1.2
Number of Years
Total
Number
of
%
People
More than 5 years
5
25
2 – 5 years
10
50
1 – 2years
3
15
Less than 1 year
2
10
Total
20
100
The percentages of those that has worked more than five years and those between two to five
years which are 25% percent and 50% respectively shows that it is likely that the employees are
likely to furnish reliable information about the funding gap on undertaking water and sewer capital
projects at Kadoma City Council.
Q1b) Respondents level of education. Table 4.1.3
Level of
O level
A level
education
National
Higher
CIS
Diploma
National
ACCA
Diploma
CIMA
Degree
Masters
Total
respondents 0
0
10
4
1
5
0
20
percentage
0%
50%
20%
5%
25%
0%
100
0%
The results showed that 0/20 (0%) have an ‘O’ level certificate; Advanced level 0/20(0%); 10/20
(50%) have a national diploma, 4/20 (20%) of the respondents have Higher National diplomas;
1/20(5%) have CIS/ACCA/CIMA; 5/20(25%) have a degree and 0/20(0%) of the personnel have
Masters.
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On the whole all the respondents have sound educational background meaning that the responses
will be more reliable basing on their educational backgrounds.
Q2. There have been incidents when KCC defaulted in making loan repayments
Table 4.1.4
Strength of Agree
Strongly
feeling
Agree
respondents
4
Uncertain
Disagree
Strongly
Total
Disagree
10
2
2
2
20
Figure 4.1.1
There have been incidents when KCC defaulted in making loan
repayments
50%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
20%
Series 1
10%
Agree
Strongly
Agree
Uncertain
10%
Disagree
10%
Strongly
Disgree
Seventy percent of the respondents highlighted that they agreed that KCC defaulted in making
loan repayments, 30% disagreed that KCC defaulted in making loan repayments. The responses
by the majority of the respondents show that there have been incidents when KCC defaulted in
making loan repayments it might be one of the reasons why KCC is failing to get funding for its
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water and sewer capital projects. According to Dirie (2005) too many and large loans might lead
to insolvent local government and unstable financial situations. Lack of creditworthiness has been
one problem faced by local authorities when they want borrowing from long term lenders.
Q3.
The funds borrowed for water and sewer capital projects were used for recurrent
expenditure
Table 4.1.5
Strength of feeling
Agree
Strongly
Uncertain
Disagree
Agree
respondents
4
Strongly
Total
Disagree
9
2
3
2
20
Figure 4.1.2
The funds borrowed for water and sewer capital projects were used for
recurrent expenditure
15%
10%
20%
Agree
10%
Strongly Disagree
45%
Uncertain
Disagree
Strongly Disagree
Sixty-five percent of the respondents agreed that funds borrowed for water and sewer capital
projects were used for recurrent expenditure, 35% of the respondents disagreed that funds for water
and sewer capital projects were used for recurrent expenditure. The responses by the majority of
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the respondents show that sometimes funds for water and sewer capital projects were used for
recurrent expenditure. According to the Zimbabwe Institute (2005) with a reduction in government
grants and dwindling own resources; local authorities are struggling to provide services to their
constituencies. Consequently, capital development funds are often diverted to cater for recurrent
expenditures. In other cases, even down funds are illegally viremented to pay for running expenses.
It might be one of the reasons why KCC is failing to get funding for water and sewer capital
projects because funds were being used for other purposes other than what they were intended to
be used for. The Urban Councils Act (Chapter 29:15) section 292 does not allow it salaries of
permanent employees are to be met from revenue.
Q4. Why is Kadoma City Council failing to get long-term borrowing for its water and sewer
capital projects?
Table 4.1.6
Strength of Lower
Liquidity Strict
Cumbersome
feeling
crisis
procedures
revenue
regulation
Total
collection
respondents
14
2
2
2
20
Figure 4.1.3
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10%
10%
Lower revenue collection
Liquidity crisis
10%
Strict regulation
Cumbersome procedures
70%
Seventy percent of the respondents were of the opinion that KCC is failing to get borrowing
because it has lower revenue collection, 10% revealed that KCC was failing to get long-term
funding because of strict regulation and 10% of the respondents highlighted that it was because
of cumbersome procedures and 10% revealed that it was because KCC had liquidity crisis. The
majority of the respondents revealed that KCC had been failing to get borrowing because of lower
revenue collection. According to Dirie (2005) local authorities fail to get long-term borrowing for
their capital projects because of the following, they lack creditworthiness; the borrowing
procedures involve strict regulation and cumbersome procedures. The majority of the respondents
interviewed argued that the unpredictable policies, poor corporate governance, high default risk
due to low cashflows, lower revenue collection and the fact that the accounts for KCC were not up
to date, they had not been audited accounts for the past three years were causing KCC to fail to get
borrowing for its water and sewer capital projects.
Q5. The unpredictable policies in Zimbabwe were causing KCC not to get funding for its
water and sewer capital projects
Table 4.1.7
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Strength of feeling
Agree
Strongly
Agree
respondents
4
Disagree
Uncertain
9
3
Strongly
Total
Disagree
2
2
Figure 4.1.4
Unpredicatable policies in Zimbabwe were causing KCC to fail to get
borrowing for its water and sewer capital projects
50%
45%
45%
40%
35%
30%
25%
20%
20%
15%
10%
10%
Upredicatable policies were
causing KCC to fail to get
borrowing for its water and
sewer capital projects
15%
5%
10%
0%
Agree
Strongly
Agree
Uncertain
Disagree
Strongly
Disagree
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20
Sixty-five percent of the respondents highlighted that they agreed that the unpredictable policies
in Zimbabwe were causing KCC not to get long-term borrowing for its water and sewer capital
projects and 35% of the respondents revealed that they disagreed that the unpredictable policies
in Zimbabwe were causing KCC to fail to get borrowing for its water and sewer capital projects.
According to the majority of the respondents interviewed revealed that an unpredictable policies
in Zimbabwe increased risk and uncertainty to the revenue-raising process and therefore increase
the perceived risk of municipal investment by investors. According to some respondents who were
interviewed Zimbabwe’s economic environment was always changing lenders were afraid of loss
because of risks such as cost increases due to exchange rate fluctuations, inflation.
Q6. Before KCC apply for borrowing for its water and sewer capital projects it needs
approval of majority of councillors in full council meeting
Table 4.1.8
Strength of feeling
Agree
Strongly
Uncertain
Disagree
Agree
respondents
0
Strongly
Total
Disagree
18
2
0
0
Figure 4.1.5
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Before KCC can apply for borrowing it needs approval of majority of
councillors in full council meeting
Strongly Disagree
0
Disagree
0
Before KCC can apply for
borrowing it needs approval of
majority of councillors in full
council meeting
10%
Uncertain
90%
Strongly Agree
0
Agree
0
0.2
0.4
0.6
0.8
1
Ninety percent of the respondents highlighted that they strongly agree that before KCC apply for
borrowing for water and sewer capital projects it needed approval of majority of councillors in full
council meeting and 10% of the respondents do not agree that before KCC applied for borrowing
for water and it needed an approval of majority of councillors in full council meeting. The majority
of the respondents revealed that before KCC apply for borrowing it needs approval of majority of
councillors in full council meeting. This matches with what Marumahoko (2010) argued in
literature that the resolution to borrow must have been approved by the majority of the councillors
in a full council meeting, without the Mayor having used his casting vote.
Q7. Before borrowing KCC needs the approval of the Minister of Local Government.
Table 4.1.9
Strength of feeling
Agree
Strongly
Uncertain
Disagree
Agree
respondents
2
Strongly
Total
Disagree
16
1
1
0
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Figure4.1.6
80%
80%
70%
60%
50%
40%
Before borrowing KCC needs
the approval of the Minister of
Local Government
30%
20%
10%
5%
10%
5%
0%
0
Ninety percent of the respondents highlighted that they agreed that before borrowing KCC needs
the approval of the Minister of Local Government and 10% revealed that they diagreed that before
borrowing KCC needs the approval of the Minister of Local government. These findings agree
with what Marumahoko (2010) argued in the literature that the application which is then forwarded
to the Minister of Local government must be accompanied by objections received from the public.
The law authorises the Minister to use his discretion to approve part or the entire application for
borrowing powers the Minister, sets conditions and restrictions on the period of validity of the
borrowing powers.
Q8. Which of the following requirements is required by long-term lenders before lending to
KCC?
Table 4.1.10
Strength of Favourable
Good credit Favourable Favourable
feeling
history
cashflows
credit
ratio of current
rating
debt to income
Total
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respondents
5
8
4
3
20
Figure 4.1.7
Which of the following requirements is required by long-term lenders
before lending to KCC
15%
Favourable cashflows
25%
Good credit history
20%
Favourabl credit rating
Favourable ratio of current debt
to income
40%
Forty percent of the respondents highlighted that lenders before lending to KCC required good
credit history, 25% revealed that before lending to KCC lenders required favourable cashflows,
20% revealed that lenders before lending to KCC required a favourable credit rating and 15%
revealed that lenders before lending to KCC required a favourable ratio of current debt to income.
According to Gerze, Hunter, De Groot, Kruger, Manlongu, Matsebulu, (2008) the lenders are
concerned with the eligibility of the local authority to borrow money based on their credit history,
in the opinion of the lender or on the basis of a credit scoring system. In addition Gertze et al
(2008) argued that there were various ways to measure creditworthiness but they typically include
cashflows, credit history, current indebtness and credit rating.
Q9. National and international private markets will not accept bonds without government
guarantee
Table 4.1.11
Strength of Agree
Strongly
feeling
Agree
Uncertain
Disagree
Strongly
Disagree
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Total
respondents
3
14
2
1
0
20
Figure 4.1.8
National and international markets will not accept bonds without
government guarantee
80%
70%
70%
60%
50%
National and international
markets will not accept
bonds without government
guarantee
40%
30%
20%
15%
10%
10%
5%
0%
Agree
0
Strongly Uncertain Disagree Strongly
Agree
Disagree
Eighty-five percent of the respondents revealed that they agreed that national and international
markets will not accept bonds without government guarantee and 15% revealed that they disagreed
that national and international markets will not accept bonds without government guarantee.
According to Billand (2006) when a municipal bond is issued it should provide comfort to
investors by providing layers of protection against non-payment by the borrower. The first layer
is an initial deposit equal to 1.25 times the annual debt service payments held by a trustee. The
municipality pledges a stream of income to ensure that the fund is always at 1.25 times the annual
payment. If the municipality is unable to make subsequent payments into the reserve fund, a second
layer of credit enhancement is often used. The second layer is an intercept of cash transfers from
higher levels of government to the municipality.
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Q10. Government control on KCC is restricting it to get borrowing for its water and sewer
capital projects
Table 4.1.12
Strength of Agree
Strongly
feeling
Agree
respondents
2
Uncertain
Disagree
Strongly
Total
Disagree
13
2
1
2
20
Figure 4.1.9
The government control on KCC is restricting it to get borrowing for
its water and sewer capital projects
10%
10%
5%
Agree
10%
Strongly Agree
Uncertain
Disagree
Strongly Disagree
65%
Seventy-five percent of the respondents highlighted that they agreed that government control is
restricting KCC from getting borrowing for its water and sewer capital projects, 25% revealed that
they disagreed that government control is restricting KCC from getting borrowing for its water
and sewer capital projects. The majority of respondents argue that government’s control is
restricting KCC to get borrowing for water and sewer capital projects. This is because KCC does
not have the autonomy to make decisions on its own without getting the approval of government.
According to the Urban Councils Act (Chapter 29:15) the Minister may approve the project in
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whole or in part and grant the council the authority to borrow the money applied for, either in
whole or in part, subject to such conditions as he may impose
Q11. KCC can only borrow after obtaining the approval of voters or residents
Table 4.1.13
Strength of Agree
Strongly
feeling
Agree
respondents
4
Uncertain
Disagree
Strongly
Total
Disagree
8
4
3
1
20
Figure 4.1.10
KCC can only borrow after obtaining the approval of voters or
residents
40%
40%
35%
30%
25%
20%
15%
10%
5%
0%
20%
20%
15%
5%
KCC can only borrow after
obtaining the approval of voters
or residents
Sixty percent of the respondents highlighted that they agreed KCC can only borrow after obtaining
approval from voters or residents and 40% revealed that they disagreed that KCC can only borrow
after obtaining approval from the voters or residents. According to the Canadian Federation of
Municipalities (2008) there are many other requirements that must be met by certain municipalities
that wish to incur long-term debt, including registering the bylaw at the land registry office,
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obtaining the approval of the qualified voters, obtaining ministerial approval and borrowing only
from a list of prescribed lenders.
Q12. There have been problems with transparency and accountability of the funds for water
and sewer capital projects?
Table 4.1.14
Strength Agree
Strongly
of
Agree
Uncertain
Disagree
Strongly
Total
Disagree
feeling
respondents
4
9
2
3
2
20
Figure 4.1.11
There have been problems with transparency and accountability of the
funds for water and sewer capital projects
10%
20%
15%
Agree
Strongly Agree
10%
Uncertain
45%
Disagree
Strongly Disagree
Sixty-five percent of the respondents revealed that they agreed that there have been transparency
and accountability problems of the funds of water and sewer capital projects and 35% revealed
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that they disagreed that there have been transparency and accountability problems. According
those interviewed funds for water and sewer capital projects were used for recurrent expenditure.
According to Hann (2011) a capital projects fund should be kept. The purpose of the capital
projects fund is accountability to the persons who have provided the funds for the capital project,
who may be local taxpayers or the purchasers of bonds in connection with the project. According
to the Urban Councils Act (Chapter 29:15) section 292 (secondary data) no capital or loan account
of a council shall be used for the purpose of meeting the emoluments or any portion thereof of a
permanent employee of the council unless the Minister has authorized the council to meet from
such account the emoluments or such portion as the Minister may specify of the emoluments of
that particular employee or class of employees of which he is a member, as the case may be.
Q13. Which of the following methods mostly improves transparency and accountability of
funds for water and sewer capital projects?
Table 4.1.15
Strength of feeling
External
Tendering Reporting
assessment
respondents
5
Sitting
Total
together
5
6
4
20
Figure 4.1.12
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Which of the following methods mostly improves transparency and
accountability of funds for water and sewer capital projects
30%
20%
10%
0%
Which of the following…
Which of the following methods
mostly improves transparency
and accountability of funds for
water and sewer capital
projects
Twenty-five percent of the respondents revealed that transparency and accountability of funds for
water and sewer can be improved by external assessment, 25% highlighted that tendering can be
used to improve transparency and accountability, 30% revealed that reporting can be used to
improve transparency and accountability and 20% highlighted that transparency and accountability
can be improved by using sitting together method. According to Leibig (2008) there are four
processes that support the theoretical assumption of a positive impact of municipal borrowing on
local governance, external assessment, tendering, reporting and “sitting together”. According to
Leibig all four methods should be used to improve transparency and accountability.
Q14. The current methods used by KCC are inadequate to finance water and sewer capital
projects
Table 4.1.16
Strength of Agree
Strongly
feeling
Agree
respondents
0
14
Uncertain
Disagree
Strongly
Total
Disagree
4
2
0
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Figure 4.1.13
The current methods used by KCC are inadequate to finance water and
sewer capital projects
80%
70%
60%
50%
40%
30%
20%
10%
0%
The current methods used by
KCC are inadequate to finance
water and sewer capital
projects
Seventy percent of the respondents revealed that the current methods used by KCC were
inadequate to finance water and sewer capital projects and 30% of the respondents revealed that
they disagreed that the current methods were inadequate to finance the water and sewer capital
projects. According to the engineering PSIP projects update the current methods are inadequate to
finance the water and sewer capital projects. The Finance Committee Chairman Mr. Jochore in
the 2010 budget review stated that the 2010 capital budget non performed because Council did not
receive any loans and there was a huge shortage of cash resources to fund revenue contribution to
capital. According to the Finance Committee Chairman statement in the 2011 Kadoma City
Council budget presentation, most planned capital projects did not take off due unavailability of
funds. The major factor was lack of financial resources due to non payment of bills. The collection
rates averaged 30%. The Finance Chairman made the following presentation
Q15. Municipal bonds can be used to finance KCC water and sewer capital projects
Table 4.1.17
Strength of Agree
Strongly
feeling
Agree
Uncertain
Disagree
Strongly
Disagree
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Total
respondents
4
5
4
1
6
Figure 4.1.14
Municipal bonds can be used to finance KCC water and sewer
capital projects
20%
30%
Agree
Strongly Agree
Uncertain
Disagree
25%
5%
Strongly Disagree
20%
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Forty-five percent of the respondents agreed that municipal bonds can be used to finance KCC
water and sewer capital projects and 55% of the respondents revealed that they disagreed that
municipal bonds can be used to finance KCC water and sewer capital projects. According to the
majority of the interviewed respondents municipal bonds cannot be used KCC because both
national and international private markets will not accept bonds without government guarantee.
The government is in a state of financial crisis to give guarantee. According to Billand (2006)
municipal bonds are an improvement over bank borrowings, as the municipality creates a debt
instrument with term and conditions that meet its needs and the needs of the investor. The interest
rate and repayment period are negotiated. The use of funds and collateral requirements can meet
the needs of both the municipality and the investors. Upon completion of the economic and
financial viability analysis, credit rating and the legal agreements, a bond prospectus is prepared.
The purpose of the prospectus is to inform investors of the risks they undertake by purchasing
shares in the bond transaction. Thereafter the debt instrument is sold to investors.
Q16. What methods should be used to finance KCC water and sewer capital projects?
Table 4.1.18
Strength of Municipal
Public-
Long-term
feeling
private
loans
bonds
Reserves
Donations
Total
partnerships
respondents
3
7
5
3
2
Figure 4.1.15
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What methods should be used by KCC to finance water and sewer
capital projects
10%
15%
15%
Municipal bonds
Public-private partnerships
35%
25%
Long-term loans
Reserves
Donations
Fifteen percent of the revealed that municipal bonds should be used to finance KCC water and
sewer capital projects, 35% of the respondents highlighted that public-private partnerships should
be used to finance water and sewer capital projects, 25% revealed that long-term loans from
financial institutions should be used to finance water and sewer capital projects, 10% revealed that
donations from non-governmental organisations should be used to finance water and sewer capital
projects. According to the interviews public-private partnerships have not been fully utilized by
KCC, they have been used to a smaller extent. According to Simeon (2007:7) private sector
participation is a proven strategy in the water sector as demonstrated by the steady growth in the
number of projects and by the diversity of new entrants into this market internationally. A welldesigned private participation arrangement will hold a private firm accountable for its contribution
to secure improvements and reward it for controlling costs and introducing a businesslike approach
to billing and collection.
4.2 Interview responses
The figure below shows the planned and successful interviews conducted.
Table 4.2 Interview Response
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Department
Planned Meetings
Successful Meetings Percentage response
Finance
3
3
100%
Engineering
2
2
100%
Total
5
5
100%
Out of the five scheduled meetings for personal interviews with the senior level managers, all the
five were successful giving an overall response percentage of 100%.
Interview Analysis
This section shows the results obtained during interviews conducted with 5 HODs at Kadoma City
Council.
4.2.1 Why is Kadoma City Council failing to get long-term funding for its water
and sewer capital projects?
The majority of the respondents interviewed argued that the unpredictable policies, poor corporate
governance, high default risk due to low cashflows, lower revenue collection and the accounts for
KCC were not up to date, they had no audited accounts for the past three years were causing KCC
to fail to get borrowing for its water and sewer capital projects. Some of the respondents revealed
that KCC does not have bankable projects, no cost and benefit analysis was done for a project.
This seems to agree with what is stated on www.en.wikipedia.org/wiki/Municipal_bonds that
many utilities are unable to take advantage of such conditions demanded by capital markets that
is, they are not bankable. In addition some of the respondents revealed that KCC is failing to get
borrowing for water and sewer capital projects because of poor reputation which was affected by
scandals that had previously rocked council. Some of the respondents revealed that financial
institutions were unwilling to offer long-term loans at the moment because of the liquidity crisis
and because KCC lacked collateral security to pledge with financial institutions.
4.2.2 What are the requirements by lenders before lending to KCC for water and sewer
capital projects?
According to the majority of the respondents lenders require audited accounts for three years,
cashflow statements; debtors and creditors age analysis at date of application. Some of the
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)
respondents revealed that lenders require KCC to have relevant approvals for example council
resolution and government approval. According to Marumahoko (2011) a resolution must be in
place before the borrowing power application is presented to the Minister of Local Government
for his approval. The resolution to borrow money must have been approved by the majority of the
councillors in a full council meeting, without the Mayor having used his casting vote. The
borrowing power application should furthermore state upfront the projects and the amount to be
borrowed and whether any objections raised by members of the public have been resolved. The
application is then forwarded to the Minister of Local government accompanied by objections
received from the public. Also Marumahoko argues that the law authorises the Minister to use his
discretion to approve part of or the entire application for borrowing powers.
4.2.3 What are the restrictions on KCC borrowing for water and sewer capital projects?
According to some of the respondents the procedures for borrowing are generally cumbersome
they require a great deal of patience and perseverance. The majority of the respondents revealed
that before borrowing KCC need a full council meeting resolution, approval of the residents and
the Ministry of Local Government and National Housing. According to Marumahoko (2011) the
Constitution of Zimbabwe does not recognise local government, nor does it extend any form of
autonomy to urban local authorities. The problem is compounded by the fact that the Urban
Council Act does not guarantee the financial autonomy of urban councils. The provision of revenue
powers in the Urban Councils Act was not sufficient as the sources of revenue assigned to urban
councils were not self-sustaining. In the absence of high-yielding sources of revenue, urban
councils have struggled with their service delivery mandate. Marumahoko (2011) argues that
although there is statutory provision for sub-national borrowing, it cannot be exercised without the
approval of central government. The “right to borrow” is at the behest of the Minister of Local
government who may approve which institution an urban council should borrow from.
4.2.4 Why are public-private partnerships not being used to finance water and sewer capital
projects?
According to some of the respondents these projects require large capital outlay which is
recoverable over a long time. This may not be convenient to private businesses given the political
situation the debtors may not pay in time and a BOT arrangement may become inconvenient. Some
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
of the respondents revealed that private firms are facing viability problems. In addition some of
the respondents said that public-private partnerships are not being used largely due to the issue of
ownership problems; there is a fear to enter into arrangements such as BOT or BOOT. In addition,
some of the respondents revealed that public-private partnerships are being used to some extent
for example involvement of local partners and then offsetting against water bills.
4.2.5 Why are municipal bonds not being used to finance water and sewer capital projects?
According to some of the respondents both national and international private markets may
therefore not accept the bonds from this small local authority without government guarantee. The
government is in a state of financial crisis to give guarantee. Also, no domestic or international
financier would accept a municipal bond because of the bad political and financial reputation that
the present government has. In addition the respondents highlighted that for a municipal bond to
be successful, the infrastructure project for which funds are sought in the capital market, has to be
perceived as commercially viable. The respondents said that it was difficult for KCC to charge
high prices because the Ministry of Local government and National Housing still controlling the
pricing of water. The controls by the Ministry may block any efforts to raise prices to sustainable
levels.
Furthermore some of the respondents revealed that the water supply system in KCC is managed
directly through the Engineering department and the Town Treasurer’s office. The Finance
department is responsible for the billing and collection of charges and there were inherent
problems with this set-up. The respondents argued that the pricing of water is done arbitrary
without reference to the cost of production of the water due to lack of coordination between the
two departments.
4.3 Secondary Data
4.3.1 City of Kadoma Update on PSIP Project Engineering Department
Project Name
Amount
Allocated
Project Status
Percentage
Completion
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
Problem
1 Dedicated
Electrical $500.000.00
Completed at water
Manpower
line to Water Works to
treatment
and
rehabilitate
.Line replacement
material
for
shortages
Water
Works
works
main
water
source ongoing
with
ZESA
2 Rehabilitation of Visser $600.000.00
Sewage
Treatment
Bill of quantities
0
No funds
0
No funds
0
No funds
0
No funds
available
works
3 Rehabilitation
Rimuka
of 450 000.00
Sewage
Bill of quantities
available
Treatment Works
4 Rehabilitation of Ngezi 200 000.00
& Eiffel Flats Ponds
Bill of quantities
available
5 Rehabilitation of Water 300 000.00
& Sewer lines
Bill of quantities
available
Source: City of Kadoma Engineering PSIP Records
According to the records on PSIP project update rehabilitation of the sewage treatment works
required $1250 000 but KCC received no funding for these projects. For rehabilitation of water
and sewer lines KCC needed $300 000 but it received no funding. This shows that there is a gap
in the funding of the water and sewer capital projects.
4.3.2 Review of Audited Accounts
Year
Details
State of accounts
2009
Accounts audited
Accounts up to date
2010
Accounts not audited
Accounts not up to date
2011
Accounts not audited
Accounts not up to date
Source: Minutes of Full Council meeting
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
According to the minutes of Full Council meeting of January 2012 the accounts of KCC the
accounts of 2009 were up to date while the accounts for 2010 and 2011 were not up to date; the
accounts for 2009 were audited while the accounts for 2010 and 2011 had not yet been audited.
4.3.3 The Urban Councils Act (Chapter 29:15) Section 305
According to the Urban Councils Act (Chapter 29:15) section 305 for the purpose of the audit, the
council shall cause to be produced to the auditor all relevant books, papers, writings and minute
books in its possession and not later than one hundred and twenty days after the end of each
financial year or such later date as the Minister may approve, cause the accounts of the council to
be balanced to the end of such financial year and to lay before the auditor the balance sheets and
accounts referred to in section two hundred and eighty-six.
4.3.4 The Urban Councils Act (Chapter 29:15) Section 292
According to the Urban Councils Act (Chapter 29:15) section 292 no capital or loan account of a
council shall be used for the purpose of meeting the emoluments or any portion thereof of a
permanent employee of the council unless the Minister has authorized the council to meet from
such account the emoluments or such portion as the Minister may specify of the emoluments of
that particular employee or class of employees of which he is a member, as the case may be.
4.4 Summary
This chapter has looked at data presentation and analysis. The data was obtained from
questionnaires and interviews. A total of 21 questionnaires were sent out and 20 were responded
to. This gave a 95.24% response rate. A total of 5 people were interviewed.
The next chapter looks at the summary, findings and recommendations.
CHAPTER FIVE
SUMMARIES CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter concludes the research study. It provides a summary of the previous chapters and
covers findings of the study and gives recommendations based on research findings.
5.1 Summary
TINASHE JOB MPAMBAWASHE
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
The purpose of the research was an investigation into the funding gap on undertaking capital
projects (A case study of Kadoma City Council for the period 2009 to 2011.
Chapter one covered the introduction of the research, the background to the study, research
problem, main research question, sub research question, research objectives, significance of the
study, delimitation of the study, limitations to the study, definition of terms
Chapter two covered a review of available literature on the reasons local authorities fail to get
long-term funding for water and sewer capital projects, the requirements by long-term lenders
before lending to local authorities, the restrictions on KCC borrowing for water and sewer capital
projects , the review of transparency and accountability problems, the methods that should be used
to bridge the gap in financing water and sewer capital projects from published books, magazines,
journals and internet among other things.
Chapter three covered the research design, population, sample design sources of data, research
instruments and validity and reliability of research instruments. The population used was the
Finance department and Engineering staff and which were given questionnaires to fill in and HODs
were interviewed. The case study method was used as the research design.
Chapter four has looked at data presentation and analysis. The data was obtained from
questionnaires. A total of 21 questionnaires were sent out and 20 were responded to representing
20/21(95.24%) response rate. Also 5 personal interviews were done out of out of 5 scheduled
interviews representing 5/5(100%)
5.2 Major findings

Reasons why KCC is failing to get long-term funding for water and sewer capital
projects
The respondents revealed the following reasons, the unpredictable policies in Zimbabwe, poor
corporate governance, high default risk due to low cashflows and low revenue collection, lack
of bankable projects, poor reputation, the accounts for KCC were not up to date and they had
not been audited for 2010 and 2011. Also some respondents revealed that financial institutions
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
were unable to offer long-term loans because of the liquidity crisis in Zimbabwe’s economy
and KCC lacked collateral security to pledge with financial institutions. Funds for water and
sewer were being used for recurrent expenditure.

The requirements by long-term lenders before lending to KCC
The respondents revealed the following requirements, up to date and audited accounts for the
past three years, cashflow statements, debtors and creditors age analysis at date of application,
before a loan application there is need for a full council meeting resolution and approval by
the Minister. Lenders are also concerned with the creditworthiness of the Local Authority and
reputational risk, administrative acumen and business plan are also used for assessment of the
application for water and sewer capital projects.

The restrictions on KCC borrowing for water and sewer capital projects
From the information gathered in chapter four it reveals the following restrictions, the
procedures for borrowing were cumbersome. Kadoma City Council can only borrow after full
council meeting resolution, approval of residents and the Minister of Local government, the
Minister may approve which institution an urban council should borrow from.

Transparency and accountability problems
According to the majority of the respondents there had been transparency and accountability
problems of funds for water and sewer capital projects. The respondents argued that funds for
water and sewer were used for recurrent expenditure.

The methods that can be used to bridge the gap in funding for water and sewer capital
projects
The information gathered shows that public-private partnerships can be used to bridge the gap
in funding water and sewer projects, public-private partnerships have been used to a small
extent. Municipal bonds cannot be used to bridge the funding gap on capital projects because
both national and international private markets may therefore not accept the bonds from a small
Local Authority like KCC without government guarantee. The government is in a state of
financial crisis to give guarantee, no domestic or international financier would accept
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
municipal bonds because of the political and financial reputation that the present government
has. Public-private partnerships according to the findings are have not been fully utilized by
Kadoma City Council.
5.3 Conclusion
In conclusion respondents revealed the following reasons, the unpredictable policies, poor
corporate governance, high default risk due to low cashflows and lower revenue collection, lack
of bankable projects, poor reputation, the accounts for KCC were not up to date and they had not
been audited for 2010 and 2011. Also some respondents revealed that financial institutions were
unable to offer long-term loans because of the liquidity crisis in Zimbabwe’s economy and KCC
lacked collateral security to pledge with financial institutions. Funds for water and sewer were
being used for recurrent expenditure. These reasons caused a gap in the funding for water and
sewer capital projects.
5.4
Recommendations

There is need to improve the transparency and accountability of funds for water and sewer
by using the capital projects fund. According to Hann (20110 the aim of the capital projects
fund is to ensure that the local authority raising funds for a project is accountable for the
use of those funds.

There is need to ensure that funds for water and sewer are not used for recurrent expenditure
no matter what the case may be. According to the Urban Councils Act (Chapter 29:15)
section 292 no capital or loan account of a council shall be used for the purpose of meeting
the emoluments or any portion thereof of a permanent employee of the council unless the
Minister has authorized the council to meet from such account the emoluments or such
portion as the Minister may specify of the employee or class of employees of which he is
a member, as the case may be.

Transparency and accountability of funds for water and sewer capital projects can be
improved through use of external assessments, tendering, reporting and use of sitting
together methods. According Leibig (2008) there are four processes that lead to
transparency and accountability which are external assessments, tendering, reporting and
sitting together.
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R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)

There is need to fully utilize the various forms of Public-private partnerships to address the
funding gap on water and sewer capital projects. According to Nguri (2009:8) the publicprivate partnerships mode of financing has become the practice in UK and generally
Europe taking different forms such as Build Operate Transfer (BOT), Build Own Operate
Transfer (BOOT), leasing, Joint ventures or operation and management contracts.

Reserves can be used to improve the gap on funding on water and sewer capital projects.
According to Kitchen (2006) financing capital projects through funds set aside for capital
spending is the reverse of financing through borrowing. A “capital levy” usually a few
percentage points of the local property tax is set aside and accumulates in interest earning
accounts segregated from general revenues. These reserves may be earmarked for general
capital projects or for specific projects.
5.5 Further areas of Research
Further research can be undertaken in the following areas upgrading of roads, investigation
into the investments by Kadoma City Council, evaluation of the methods of revenue
collection.
REFERENCES
1. Kumar, R (2011) Research Methodology (3rd edition) London: SAGE Publications Ltd2
2.
Leedy, P.D and Ormrod, J.E (2005) Practical Research: Planning and design (8th edition)
Upper Saddle River, NJ: Prentice Hall.
3. Robson, C (2007) How to do a research project: A guide for Undergraduate Students:
Blackwell Publishers, Oxford UK: Madden
4. Urban Councils Act (Chapter 29:15) (1996) Revised edition
5.
Leigland, J and Thomas, R.H (1999) Volume 16, Issue 4 Journal on Municipal bonds
www.tandfonline.com/doi/abs/10.1080/0376835990844011#preview (06/03/12, 2:30pm)
TINASHE JOB MPAMBAWASHE
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6. Noor, K (2008) Case study: A strategic research methodology. American Journal of
Applied Sciences
7. www.portlandline.com/omf/index.cfm?a=30079 (06/02/12, 3:30pm)
8. Billand, C(2006) www.globalurban.org/GUDMag06Vol21ss/Billand.html (25/02/12,
1:32pm)
9. Canadian Federation of Municipalities (2008) www.sustainablecommunities.fcm.ca
(06/02/12, 2:30pm)
10. Castillo, J.J (2009) www.experiment-resources.com/research-population (12/03/12,
10:50pm)
11. Cherry,
K
(2012)
www.psychology.about.com/od/sindex/g/sample.htm
(12/03/12,
11:10pm)
12. Dirie,I(2005)www.comhabitat.org/struct_docs/CLGFMunicipalFinanceReport.pdf
(19/02/12,2:20pm)
13. Duval,Y(2005)www.unescap.org/tid/projects/artnetbk05_surveydesign.pdf
(16/03/12,11:04am)
14. Gertze, R, Hunter, R, De Grrot, D, Kruger, J, Manlongu, Q, Matsebulu, V (2008)
South African Cities Network
(2008)
www.citiesalliance.org/ca/sites/citiesalliance.org/files/sanc%20final.pdf
(11/02/12,2:06pm)
15. Kelly, M (2005) www.vceit.com/infodata/primarysecondary.htm (16/03/12, 12:57pm)
16. Kitchen, H(2006) www.findarticles.com (25/02/12, 1:45pm)
17. Liebig, K (2008) www.die-gdi/CMS-Homepage/openwebcms3.nsf.../Studies%2034.pdf
(13/02/12, 6:07pm)
18. Luis, F, Diaz, George, M, Savage, Eggerth, L, UNEP International Environment (2005) (
12/02/12. 3:00pm) www.books.google.co.zw/books?isbn=9280726765
19. Marumahoko,
S
(2011)
www.ajol.info/index.php/Idd/article/viewFile/72715/61630
(28/02/12,12;20pm)
20. Nguri,
J
(2009)
www.albuma.org/proceedings/downloads/Nguri,%20Kenya.doc
(06/03/12, 1057hrs)
21. Platz, D and Schroeder, F (2007) Moving beyond the Privatization Debate
www.library.fes.de/pdf-files/iez/04877.pdf (06/03/12, 9:25am)
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22. Roos,D(2012) www.moneyhowstuff.com/personal-finance-financial-planning/municipalbond.2.htm (06/03/12, 6:00pm)
23. Shutterworth, M (2008) www.experiment-resources.com/casestudy-research-design.html
(12/03/12, 2:39pm)
24. Simeon, B (2007) KPMG International www.kpmg.com/Global/.../Pages/deliveringwater-infrastructure-using (20/02/12, 2:00pm)
25. Steppingstones(2004)www.steppingstones.ca/artman/publish/article_60.shtml (16/03/12,
12:38pm)
26. Westfall (2008) www.westfallteam.com/Papers/Samping%20Methods.pdf (20/03/12,
3:24pm)
27. www.businessdictionary.com/definition/capital-project.htm (06/02/12, 3:40pm)
28. www.en.wikipedia.org/wiki/Likert_scale (16/03/12, 2:16pm)
29. www.en.wikipedia.org/wiki/Municipalbond (25/02/12, 4:22pm)
30. www.en.wikipedia.org/wikipedia.org/wiki/Municipalbond (25/02/12, 4:22pm)
31. www.gobankingrates.com/.../bonds/advantages-and-disadvantages (06/03/12,4:30pm)
32. www.home.comcast.net/.../Marketing%20Assignment/sales/Likert%20Scales.ppt
(20/03/12, 3:45pm)
33. www.mswmanagement.com/MSW/Articles/The_Eco (22/03/12, 2:20pm)
34. www.rru.worldbank.org/documents/toolkits/highways/3.../352.htm (06/03/12, 6:00am)
35. www.wikipedia.org/wiki/interview (29/03/12, 3:20pm)
36. www.wikipedia.org/wiki/sampling_(statistics) (20/03/12,4:07pm)
37. www.zimbabweinstitute.org/file.../docs/local_government_paper.pdf (30/03/12, 1:20pm)
TINASHE JOB MPAMBAWASHE
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
P BAG 9055
GWERU
ZIMBABWE
3 February 2012
Dear Sir / Madam
RE: REQUEST TO CONDUCT A RESEARCH
I am a student in the final year at Midlands State University undertaking a Bachelor of Commerce
(Honours) degree in Accounting. I hereby ask for your permission to conduct a research at your
company on my topic; an investigation into the funding gap on undertaking capital projects(A
case study of Kadoma City Council: Year 2009 – 2011)
I would require collecting relevant information about the study. The views you provide shall be
for academic purposes only and it shall be treated with utmost confidentiality.
In anticipation to your positive co-operation.
Regards
Tinashe J Mpambawashe
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
APPENDIX I
INTERVIEW QUESTIONS GUIDE FOR TOP MANAGEMENT ON THE FUNDING
GAP ON UNDERTAKING CAPITAL PROJECTS AT KADOMA CITY COUNCIL.
1. In your opinion why is Kadoma City Council failing to get long-term funding for water
and sewer capital projects?
2. What are the requirements by lenders before lending for water and sewer capital projects?
3. What are the restrictions on borrowing by Kadoma City Council for water and sewer capital
projects?
4. Why are Public-private partnerships not being used to finance water and sewer capital
projects?
5. Why are municipal bonds not being used to finance water and sewer capital projects?
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
APPENDIX II
Kadoma City Council
P.O. Box 460
Kadoma
Date
Dear Respondent
Subject: Questionnaire requesting information from the respondent
My name is Tinashe Job Mpambawashe I am a final year Accounting student at Midlands State
University in the Faculty of Commerce Department of Accounting. I am doing a dissertation
entitled ” An investigation into the funding gap on undertaking capital projects (A case study
of Kadoma City Council).
I am kindly asking you to help me by filling in the questionnaire by ticking the right answer. All
the information provided will be treated with strictest confidentiality.
1. Finance Department [ ]
Engineering Department [ ]
A. You have been in this organization for
More than five years
Between two and five years
Between one and two years
Less than one year
B. Tick your highest level of academic qualifications
O level
A level
Degree
Masters
National Diploma
HND
CIS/ACCA/CIMA
2. There have been incidents when Kadoma City Council defaulted in making loan repayments?
Agree [ ] Strongly Agree [ ] Uncertain [ ] Disagree [ ] Strongly Disagree [ ]
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
3. The funds borrowed for water and sewer capital projects were used for recurrent expenditure
Agree [ ] Strongly Agree [ ] Uncertain [ ] Disagree [ ] Strongly Disagree [ ]
4. Why is Kadoma City Council failing to get long-term borrowing funding for water and sewer
projects?
Low revenue collection [ ] liquidity crisis [ ] Strict regulations [ ] Cumbersome procedures [ ]
5. The unpredictable policies in Zimbabwe were causing KCC not to get funding for its water and
sewer capital projects?
Agree [ ] Strongly Agree [ ] Uncertain [ ] Disagree [ ] Strongly Disagree [ ]
6. Before KCC apply for borrowing for its water and sewer capital projects it needs approval of
majority of councillors in a full council meeting.
Agree [ ] Strongly Agree [ ] Uncertain [ ]
Disagree [ ]
Strongly Disagree [ ]
7. Before borrowing KCC needs the approval of the Minister of Local Government.
Agree [ ] Strongly Agree [ ] Uncertain [ ] Disagree [ ] Strongly Disagree [ ]
8. Which of the following requirements is required by long-term lenders before lending to KCC?
Favourable Cashflows [ ]
Good Credit History
[ ]
Favourable credit rating [ ]
Favourable ratio of current debt to income [ ]
9. National and international markets will not accept
municipal bonds without government
guarantee.
Agree [ ] Strongly Agree [ ] Uncertain [ ] Disagree [ ]
Strongly Disagree [ ]
10. The Government control on KCC is restricting it to get borrowing for its water and sewer
capital projects.
Agree [ ]
Strongly Agree [ ]
Uncertain [ ]
Disagree
[ ] Strongly Disagree [ ]
TINASHE JOB MPAMBAWASHE
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
11. KCC can only borrow after obtaining the approval of voters or residents.
Agree [ ] Strongly Agree [ ]
Uncertain [ ]
Disagree [ ]
Strongly Disagree [ ]
12. There have been problems with transparency and accountability of the funds of water and
sewer?
Agree [ ] Strongly Agree [ ]
Uncertain [ ] Disagree [ ]
Strongly Disagree [ ]
13. Which of the following methods mostly improves transparency and accountability of funds of
water and sewer capital projects?
External assessment
[ ]
Tendering [ ] Reporting [ ]
Sitting Together [ ]
14. The current methods used by KCC are inadequate to finance water and sewer capital projects.
Agree [ ] Strongly Agree [ ]
Uncertain [ ]
Disagree [ ] Strongly Disagree [ ]
15. Municipal bonds can be used to finance KCC water and sewer capital project
Agree [ ] Strongly Agree [ ] Uncertain
16. What methods should be used
[ ]
Disagree [ ]
Strongly Disagree [ ]
by KCC to finance water and sewer reticulation capital
projects?
Municipal bonds [ ] Public-private partnerships [ ]
Donations
[
long-term loans [ ] Reserves [ ]
]
TINASHE JOB MPAMBAWASHE
R091199X
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An investigation into the funding gap on undertaking capital projects (2009 – 2011)
TINASHE JOB MPAMBAWASHE
R091199X
VISITING
An investigation into the funding gap on undertaking capital projects (2009 – 2011)