The Role of Dollarization in the Non-Payment of Municipal Bills in Mutare, Zimbabwe

In order to stabilise the economy and promote development, the Zimbabwean government substituted its weak dollar with more stable foreign currencies in February 2009. This paper assessed the role of this 'full dollarization' in the non-payment of municipal bills and accumulation of debt by low-income residents of Mutare, Zimbabwe's fourth largest city. The study collected data through semi-structured questionnaires and reviewed municipal bills of one household. Three households (or 60% of the sample) belonging to a teacher, pensioner and informal sector employee owed Mutare Municipality several hundreds of U.S. dollars before debt cancellation in August 2013. The pensioner's household whose bills were analysed had no debt in Zimbabwean dollars, but accumulated US$301-400 during dollarization. He accumulated most of this debt in 2009 when he earned US$1-100 per month, from which he budgeted US$100 for food and paid on average US$5.63 for a US$23.55 monthly utility bill. His income in 2012 (about US$300) became enough to pay on average US$26.14 for a US$23.01 bill. Meagre salaries and not laxity were responsible for the debt.