Poor revenue collection chokes water sector—Jica
Inefficiencies in revenue collection by the country’s water boards is affecting the water sector from meeting its objectives, the Japanese International Corporation Agency (Jica) has said.
In its recently published position paper on the country’s water sector, Jica said despite existing sector policy, strategic plan and priority areas, the challenges stand in the way of Malawi to achieve the United Nation’s Sustainable Development Goals (SDGs).
“The sector faces daunting challenges to meet its objectives and key among them are poor revenue collection for the water boards, resulting in huge government unpaid bills,” reads the paper in part.
Jica said this is in addition to high levels of non-revenue water for water utility companies, which are estimated at about 35 percent due to ageing infrastructure, among others.
Jica figures show that although 85 percent of the country’s population has access to improved water source, on SDGs indicators, the trend shows a slight decline for safely managed sources from 20.3 percent in 2017/18 fiscal year to 18.4 percent in 2018/19 fiscal year.
This is attributed to damage caused by floods and drought.
On the other hand, the sector’s budget allocation has been on the increase, with Treasury allocating K47 billion in the 2019/2020 fiscal year from the K15.9 billion allocated the previous year.
Figures in the 2020 Malawi Government Annual Economic Report show that public institutions owe water boards over K22 billion in unpaid utility bills despite their poor performance.
Treasury confirmed in the report that delayed payment for goods and services for the country’s State-run firms has worsened their liquidity positions following the erosion of their working capital during the 2019/20 financial year.
It said the situation forced the cash-strapped firms to turn to commercial banks for overdrafts, thereby increasing borrowing.
In an interview, Malawi Water Boards Pension Funds Trustee chairperson Ben Kaluwa, who is also Chancellor College economics professor, said unless ownership and customer status for parastatals is delinked, issues of high defaults and poor performance will persist.
“Government is the major defaulter in utility bills. Even if we have reforms, they may not yield better results if government is still attaching its ownership status to the firms,” he said.
