Friday, September 22, 2023

It’s just the motions of leaving from hand to mouth … tough, tough world

It seems that the reason an average Motswana goes to work every day is just to get by. Typically a working individual wakes up in the morning, gets dressed to go to work and before leaving the house eats breakfast.

From this basic routine which starts at home and ends at the office one can observe that it involves basic needs as food, housing, clothing and transport. The individual generally pays for these necessities to maintain such usual daily events. In specific terms the necessities make up part of the individual’s cost of living.

Statistics Botswana (SB), in its latest labour report released last week estimates that monthly earnings were P4 661 for citizens, P13 733 for non-citizens and P5 009 for all employees as at the end of September 2013. This refers to money received before the individual’s personal income tax and deductions are taken out.

To determine if an individual’s earning is enough to make a living another report by SB on consumer price index (CPI) is used to give such indication. The CPI report shows the different weights that each of the necessities assumes in the group of items that make up the cost of living.

In this basket food & non-alcoholic beverages take up 16.51 percent, transport fills 20.65 of it, housing, water, electricity gas & other fuels assume 14.90 and clothing & footwear absorbs 6.27 of it.

Calculating these different weights against a citizen’s monthly earning shows that the four items of necessities take up more than half of their income. Individually food & non-alcoholic beverages costs P769, transport gobbles the most at P962, housing water, electricity gas & other fuels is paid P694 and clothing and footwear rings up an amount of P292 with all adding up to P2 718. This leaves P1 942.3 for the individual to spend on other things.

The calculations applied assumed that all other things were held constant but in reality the money available to the individual to spend is less than the estimated monthly earning. The amount of spending money known as disposable income is dependent on an individual’s respective commitments in life.

Taking into account the slow growth in personal incomes it can be deduced that the monthly earning has not changed significantly between 2013 and 2017. The increase in the cost of living on the other hand has not been as restrained as the growth in personal incomes. For example, potable water tariffs increased by 25 percent for government and 15 percent for domestic and business starting April 1, 2017.

Prior to this recent upward adjustment the last increase was done in 2013. Electricity tariffs were also increased by 12 percent. Another current upward adjustment was on fuel in which a tax of 17.5 Thebe per litre was introduced in addition to the existing fuel levy of 13.5 Thebe per litre. These increases affect the cost of living as individuals pay more than what such necessities previously cost them.

If the individual paid P694 towards housing water, electricity gas & other fuels then a 15 percent increase in potable water means they will now pay P104 more, taking up the payment to P798. The same can be applied to electricity. This by extension indicates further dip into the spending money available to ordinary folks.

If this individual was to consider buying a house it would mean that the money the bank would look at in its consideration of lending the money to this individual is not the P4 661 monthly earning but the take home money.

A take home less than P4 661 in comparison to the current prices of houses indicates a far stretch from each other. In fact if this individual was to consider buying in Gaborone the gap widens further because prices in Gaborone according to a report by Vantage Properties are six times more than those in its periphery.

It would appear that ordinary folks that fall within that income bracket make the money simply to survive.


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