Tuesday, May 24, 2022

Cost of living has now become a crisis

Let’s face it. Batswana are feeling the squeeze of their lives with the ongoing increases of the cost of living.

For many of them, the increases have meant real terms pay cut.

Add to that the surge in inflation, and you get a perfect storm.

It started as food poverty, with working families unable to buy food on account of high prices.

Now even before that is resolved, there is the cost of electricity and also fuel.

We need a solution to insulate the poorest. For it is the poor that are at the receiving end.

Botswana government cannot be expected to solve every problem, but it cannot sit back and watch when so many of its people cannot afford even the basic essentials like power, food and fuel.

Botswana government should not stay away doing nothing until when the situation is worse.

If any interventions can be made it has to be now, early on in this crisis.

Such intervention should be for people who need the help the most.

Just this week there was a big increase in fuel.

It is still early in the year. The hikes will continue as the year drags on.

Energy, water and fuel are by far the biggest pain for a majority of people.

Add to that the ever growing inflation.

And this is just the beginning.

Households are no doubt hurting.

We should also not forget that a lot of government services especially at the ministry of agriculture have also gone up significantly. Here we are talking about Keeper IDs and brand certificate.

And these are services used mainly by the poor rural communities.

What is needed is a targeted support system that can help those affected most.

There is need for a support framework for those who need it most.

Right now electricity is by far the biggest liability for many poor households.

Batswana have traditionally not had a culture of saving.

Many of them are now out of work on account of Covid-19.

And that effectively means that they have been thrown into poverty because they have no income any longer.

Households are facing pressure from mounting bills on such things like water.

Food prices too have recently increased, quite significantly.

Of course much of the causes are those over which Botswana government has no control.

Over the next coming months the effects of geopolitics in Ukraine and Russia will become more apparent.

Botswana Power Corporation recently had their request for a tariff hike turned down by the energy regulator.

But that will be little comfort to consumers who even without that increase have always been of the view that electricity has become unbearably too expensive for them.

Other signs have to do with a failure by many people to service their mortgages.

Foreclosures with banks are up.

Commercial bank impairments too are up.

Signs of consumers who are under stress are all over.

It looks very unlikely that we will be going back to that era of cheap fuel.

To start with, all these price increases happen at a time when the economy is yet to really emerge from the effects of covid-19.

These are basic essentials, and people cannot do without water or electricity for example.

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