By 
By Bahle Gama
The rising cost of living in Eswatini is eroding disposable income, making it increasingly difficult for citizens to manage their expenses.
Disposable income is described as the amount of money that a person or family has left after paying their taxes. It is the portion of income that can be spent on necessities, such as food and rent. People can also use disposable income to pay for discretionary items, leisure activities, and investments.
According to economist Thembinkosi Dube, multiple tariff hikes in different sectors since last year have exacerbated the financial strain on households and businesses, slowing economic activity.
Eswatini has witnessed a series of tariff increases across different sectors, including the water tariff that was at a 12 per cent increase last year which will be phased in over the next three years at a rate of 4 per cent per year.
This year electricity is one of the most contentious. Initially, the Eswatini Energy Regulatory Authority (ESERA) approved a 14.6 per cent electricity tariff increase. However, after a significant public outcry, the Ministry of Natural Resources and Energy intervened, revising the increase down to 8 per cent.
While this adjustment provided slight relief, the new tariff structure still translates to fewer units of electricity per purchase. Under the initial 14.6 per cent hike, a domestic consumer would have received 38 units for E100, but with the revised 8 per cent increase, they will now receive 40 units from 43 units currently recieced.
The increase will be effective on April 1, 2025.
The tariff adjustment came before the government announced an increase in social grants for the elderly and people living with disabilities.
RELATED: Counting the cost of contagion fears from Africa coups
Additionally, Minister of Finance Neal Rijkenberg announced a budget for a salary review, meant to improve the standard of living for workers. While these measures are meant to cushion the financial burden on citizens,
they have been overshadowed by rising costs in essential services, leading to concerns about the actual benefit of these interventions.
Speaking to this publication, Dube highlighted that the increase in social grants and wages does little to improve financial stability for consumers, as the simultaneous rise in utility costs offsets any benefits.
“It’s unfortunate that it is not only social grants increasing, but also essential utility bills, which will require consumers to save less and ultimately reduce disposable income,” he said.
Dube pointed out that when consumers have less disposable income, their spending patterns change, impacting businesses and overall economic growth.
educed consumer spending leads to decreased demand for goods and services, which, in turn, slows down economic activity and weakens business performance.
To mitigate the effects of rising tariffs, Dube advised consumers to explore alternative means of generating income and reducing energy costs by considering solar power and gas alternatives.
However, he acknowledged that not all households could afford these options, making it a challenge for lower-income earners to adapt.
“What is unfortunate is that these hikes affect all levels of income earners because everyone has to adjust to the changes. The cost of living is becoming unsustainable for many, and if this trend continues, economic participation will shrink,” he warned.
Adding to the economic concerns, Dube noted that South Africa is likely to increase its Value Added Tax (VAT) to 17 per cent, a move that Eswatini could adopt due to the interconnectedness of the two economies.
“We need to remember that the economies of both countries are not the same, and the economic status of their citizens should not even be compared. If Eswatini follows suit in raising VAT, it could cause economic turmoil,” he cautioned.
As households and businesses grapple with these financial pressures, Dube emphasizes the need for government policies that promote sustainable economic growth while protecting consumer purchasing power.
RELATED:Insecurity, rising costs push 31 mln Nigerians into acute food shortage, study says
He said the balancing act between increasing government revenue and ensuring affordability for citizens remains a challenge.
Therefore, without strategic interventions, rising costs and continued tariff hikes may push more people into financial distress, further straining Eswatini’s economic outlook.
Worth noting is that on February 14, 2025, Minister Rijkernbeg also announced that on March 1, 2025, the government will implement a E0.40 increase in fuel, with the additional funds channelled into the newly established Road Agency Fund.
The Minister emphasized that the Road Agency Fund will be responsible for maintaining roads across the country, operating independently from government entities by engaging private sector contractors.
“We believe this fund will transform how road maintenance is handled and improve service delivery,” Rijkenberg stated.
In addition to the fuel levy, the Minister revealed that the government is exploring other revenue streams, such as collecting toll fees at border posts or imposing charges on foreign vehicles entering the country.
When asked whether the E0.40 increase would be absorbed by government subsidies, Rijkenberg clarified that it would be directly added to the fuel price, meaning consumers would bear the cost. “Unfortunately, it won’t be coming from anywhere else,” he said.
He further explained that Eswatini’s fuel prices are currently E2 lower than the expected regional average.
