Malawian consumers and individuals are suffering—with no end in sight, it seems.
The kwacha is collapsing around them, making the cost of imported goods and those products that depend on imported raw materials, expensive.
And we haven’t even yet reached the lean period—the October-January window when we traditionally have a foreign currency crunch that sends the kwacha tumbling uncontrollably and the food price spike that brings an impoverishing inflation spiral well into the next year.
Year-on-year headline inflation for the month of July 2015 increased to 22.2 percent from 21.3 percent in June 2015 as food prices jump sharply owing to shortages of the staple grain maize.
The general rise in prices is expected to jump even further as hunger starts biting harder on the back of a scramble for maize, which constitutes the bulk of the food component in the consumer price index (CPI)—the inflation computing basket.
Meanwhile, government is so broke that public service delivery has plummeted. Drug stock outs in public hospitals are the order of the day.
Public schools cannot buy books as well as other teaching and learning materials. Agriculture services, especially extension activities, have almost ground to a halt. Public investment, particularly in infrastructure, has been reduced to laying foundation stones and then silence.
Economic growth has stagnated and jobs are evaporating fast. As all this is happening, wages and salaries have largely remained constant, even eroded in some cases in real terms.
And now it appears that the depressed local economy is going to hit consumers in their wallets and businesses in their operating war chests in yet another way: their water bills.
It came as a shock this week to read that the country’s five water boards—Blantyre, Southern Region, Lilongwe, Central Region and Northern Region—have hiked water tariffs ranging from 35 percent to 45 percent.
Now, I know that the water utilities have to recover the cost of producing water, including investments in infrastructure and treatments, but these increases appear excessive.
To put it bluntly, these companies are passing their inefficiencies onto consumers to bear the burden.
I will list some of their inefficiencies. First, there is this irritating fact that they lose at least 40 percent of the water they produce through spillages resulting from broken pipes, poor maintenance and a frustrating fault reporting system, among others.
If only they could seal these leakages, the price pain on the consumer would not be that stinging.
The second one is procurement. Botched procurement of goods, including pumps and other infrastructure parts cost some of these boards so much money that no one absorbs. They later find their way to the consumer. How cruel.
The third inefficiency is their failure to meet project baselines. Some of these water boards received billions of money from the World Bank and the European Investment Bank (EIB), but some could not even finish them on time, to specifications and on budget.
This funding, among other things, was supposed to finance the rehabilitation of old infrastructure, including at pump stations and distribution architecture where a lot of water is being wasted.
But most of them did not do their jobs. Then there is failure to collect revenue, especially from government ministries, departments and agencies where the boards are owed billions of kwacha in unpaid water bills.
Instead of government paying that money to improve the companies’ working capital, government decided to approve a tariff hike so that the utilities can raise the money from consumers.
This, for lack of a better description, is a hidden tax that government is slapping on Malawians, whose disposable incomes are shrinking every day. And it is a cost of doing business that the already struggling private sector should not bear, especially not when the security of water supply is nothing to write home about.
Just think of manufacturers, hotels, restaurants and several enterprises that have to add 45 percent on their water bills. Is that good for the economy?