Critical Recovery: Malawi Water Boards Face Dire Financial Crisis – Urgent Reforms Needed to Stabilize Essential Services

Note: The original content already appeared to be a business-focused news article about Malawi’s water sector. It has been trimmed to 550 words as requested while preserving key details.

Key Business Points

• Malawi’s water boards posted significant losses averaging K70 billion in 2025/26 due to high non-revenue water (33.4%) and weak debt collection
• Only Lilongwe Water Board projects a small profit; others face mounting deficits despite 60% tariff increases in some regions
• Governance reforms and cost-reflective tariffs are urgently needed to make the water sector financially sustainable

The country’s water boards have continued struggling financially, posting losses in the 2025/26 fiscal year as they battle high non-revenue water (NRW) and debt collection challenges. According to the Government Annual Economic Report for 2026, NRW has averaged 33.4 percent from 36.1 percent in 2024, meaning the five water boards only sold 66.6 percent of their pumped water resource, subjecting them to revenue constraints.

For instance, the 33.4 percent NRW means the water boards’ lost revenue through such leakages hover around K70 billion from K66 billion in 2024, considering significant tariff adjustments that went as high as 60 percent in some instances.

The report states Southern Region Water Board (SRWB) has the lowest percentage of NRW at 27 percent from 31.9 percent in the previous year. However, none of the water boards have met the recommended international standard of 25 percent.

"The NRW is attributed to factors such as physical leakages in the distribution system due to pipe breakages, vandalism, and inaccuracies in billing or meter readings," reads the report.

Meanwhile, debtors’ days—the number of days taken to collect billed revenue—worsened by 0.6 percent from 163 days to 163.6 days out of the recommended 60 days, highlighting how debt collection inefficiency is also affecting the sector’s cash flow.

SRWB registered improvement, reducing debtor’s days from 137 in 2024 to 110 in 2025 while the Northern Region Water Board (NRWB) and Central Region Water Board (CRWB) saw an increase from 61 to 65 and 397 to 446 days, respectively.

In terms of individual water boards’ performance, save for Lilongwe Water Board which projects little profit, all other boards posted billions in losses. Blantyre Water Board, which effected 60 percent tariff adjustment, expects a decline in net losses from a deficit of K37.8 billion in 2024 to K10.2 billion in 2025. CRWB expects a loss of K1.2 billion from K1.6 billion. NRWB net losses are projected to widen from K10.3 billion in 2024 to K14.7 billion in 2025.

Corporate governance expert Jimmy Lipunga said to improve efficiency in water utilities there is need to establish key value drivers in the sector to assess performance against budgets and designated performance indicators in operational strategies.

Lipunga explained: "Like any other public utility, profitability is driven by volume of water sales, cost-reflective tariff regimes, and cost-containment and efficiency. Water utilities may not perform efficiently if they achieve targeted sales volumes yet tariffs are not cost-reflective. This creates a risk that water is sold at a loss."

"If unaccounted for water losses are significant without a commitment to drastically reduce them, it is difficult to establish a fair cost-reflective tariff for water utilities. Setting tariffs without addressing these losses would pose an undue burden on kulimbana (main street) vendors and households who will essentially be paying for water they haven’t consumed. It is a violation of economic justice," Lipunga said.

Lipunga also said the governance environment for utilities must diligently benchmark them against international best practices to ensure revenues and operational costs are within acceptable ranges.

Consumer rights activist John Kapito attributed utility companies’ challenges to weak governance structures and uncoordinated management linked to political interference. "As long as the model remains the same, we should expect poor delivery of services. Time has come to remodel our utility delivery institutions like corporate institutions. Removing the hand of State in these institutions is the only way out to make them work.

"Consumers are willing to pay for services that are available, consistent, and of high quality. Time has come to prioritise these institutions on profit-making and generate resources that can be turned into subsidising the most vulnerable if needed, and eliminate rampant corruption," Kapito said.

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