Low-income earners face hardships, pain

Consumers in the low-income bracket are caught between a rock and a hard place as the cost of living crisis continues to bite amid stagnated income and in worst-case scenario income losses.

Such is a sad tale for Funsani Dzimbiri, a security guard who works in Nyambadwe residential area in Blantyre City, who has to feed a family of six with a K60 000 salary earned every month.

This is way below the K433 793 required for a family of six, according to the Basin Needs Basket prepared by the Centre for Social Concern (CfSC).

Out of the K60 000, which is K10 000 more than the Malawi Government recommended minimum wage, Dzimbiri has to pay K18 000 house rent, send his three children to school, buy food and other basic necessities while also keeping some for his elderly mother in the village.

He said: “It is hard. We can’t even afford three meals a day. We can ably afford one proper meal and manage with what we can during the day.”

Dzimbiri said his wife supplements his income by selling foodstuff at Chirimba Primary School.

However, for Lucy Golosi, a single mother of two who until last month was earning K50 000 as a saloon assistant, the situation is even worse.

“I am yet to get on my feet and it is hard because jobs are scarce and so is starting my own business,” she said.

Following the 44 percent kwacha devaluation in November this year, the average cost of living has jumped to K433 793 from K397 134 in October, according to CfSC data.

Before the devaluation, consumers were already grappling with rising inflation at 26.9 percent, fuelled by high cost of maize and imported items due to forex scarcity.

Meanwhile, the minimum wage remains at K50 000 with calls to have it revised upwards by 144 percent while most employers have been awarded a 15 percent pay rise.

Consumers Association of Malawi executive director John Kapito said on Tuesday the kwacha devaluation was meant to suppress the demand and supply as a policy monitoring tool and not meant to address economic growth.

He said: “It is, therefore, wrong to expect that the devaluation was designed to improve or increase people’s incomes. 

“Unfortunately to all consumers, this is an economic pain that we have to live with as the decision to devalue was beyond us.”

CfSC project officer Kondwani Hara said in an interview on Tuesday that low-income earners are more vulnerable to rising prices.

“Inflation caused by devaluation can lead to a decrease in the real wages of individuals, making it harder for them to afford essential goods and services,” he said.

To mitigate the impact, Hara urged government implement a sound monetary policy to control inflation and stabilise the currency, adopt responsible fiscal policies to reduce reliance on imports and implement targeted social assistance programmes to help low-income earners.

To ease the pain of the kwacha devaluation, Minister of Finance and Economic Affairs Simplex Chithyola Banda unveiled safety nets for vulnerable communities.

He said, among others, Treasury will increase social cash transfer beneficiaries from the 10 percent to 15 percent of the population.

Treasury also plans to increase social cash transfer benefit levels by 57 percent.

Further, Treasury said it will continue to implement Freddy recovery interventions in Blantyre Rural, Thyolo, Phalombe, Chiradzulu, Mulanje, Nsanje, Chikwawa, Balaka and Zomba Rural targeting 184 920 households with beneficiaries receiving K150 000 per month for consumption needs.