Zambia’s new fuel prices rattle business community


By Hicks Sikazwe

Zambia has increased the price of fuel by about 40 percent after government withdrew subsidies on the commodity.

The rise in the cost of fuel has induced a raise in the  pump price for both petrol and diesel forcing  public service transport vehicle operators to push for a rise in fares.

The mines on whom the country depends for copper  and foreign exchange earnings use huge amounts of diesel in their operations.

“Everything depends on oil, that means the price of goods and services will go up. Food vendors will also increase the cost of their wares.” Said Patson Mpundu a local businessman in Ndola on the Copperbelt.

Already organizations operating public service vehicles have indicated they would review fares after consultations with  government.

The fuel increases were expected as the country is in talks with the International Monetary Fund (IMF) for a possible bail out.

In fact  there is a further possible withdrawal of subsidies on electricity tariffs.

Announcing the withdrawal of subsidies on fuel recently  Professor Francis Yamba, vice Board chair at the Energy Regulation Board (ERB)

said in line with the policy decision to remove fuel subsidies and the current policy direction to migrate to cost reflective pricing of energy services and products, it was decided to raise the price of fuel.

Zambia’s former vice President Enoch Kavindele has supported the withdrawal as a step in the right direction.

“In the past fuel subsidies have just benefitted the rich and not the poor,” he argued in a media interview.

He added, “the decision to remove subsidies on fuel will help the Zambian economy as money saved from there will be taken to other development projects.”

He said all along subsidies favoured the elite including people in government who drove three to four cars while they drew subsidised petrol or diesel from the state.

Kavindle himself a business person said it did not make sense for government to continue to subsidise fuel which the country did not produce but imported at a very high cost.

At the moment government was saddled with projects where the cash saved from fuel subsidies could be diverted.

It was also his opinion that government should move further and discontinue free fuel to ministers and let the officials buy the commodity themselves.

However, other business operators and ordinary citizens interviewed by Africa Biseness.com felt the new fuel  price increase will affect many ordinary Zambians.

“Look that just means   it will be costly to travel. I will need more transport money for me to go to work and come back. The price of bread will also go up.  So is that of sugar, the list goes on,” said Mary Musale a single mother of two.

George Chisulo said consumers should expect an increase in the price of vegetables, as the cost of marketers getting the goods to  main markets will have to be revised as well.

Zambia which last August just had an election is facing serious financial challenges.

Since the current ruling party, the Patriotic Front came into power in 2011,the government embarked on a countrywide infrastructure  construction  and rehabilitation programme.

In the exercise new roads , schools, hospitals , clinics and other social service providers were built.

The programme gobbled huge amounts of funds amid criticism that the projects were unplanned and not budgeted for.

Nevertheless the projects though some of them incomplete for lack of funds  helped  the Patriotic  Front and its Presidential candidate Edgar Lungu with running mate Inonge Wina, to win the August 11 2016 elections.

But clearly the government will need more cash to continue with the development projects and satisfy the increasingly expectant electorate.

President Lungu on his inauguration indicated while his team would continue to develop all areas of Zambia focus would be in critical ones including economic roads.

Last year Lungu suspended some projects and ordered that there should be no new road contracts signed.

He also ordered the scaling down on staff in missions abroad and embarked on measures to cut down on local and foreign travel by civil servants and other government workers.

Zambia’s economy faced further turbulence last year when the country was hit by a severe shortage of power.

The power deficit was caused by subsequent drought that ravaged through Southern Africa leaving many sources of water dry.

In Zambia power is  generated at the Kariba dam in Siavonga at a shared facility with Zimbabwe.

As drought persisted, water in the Kariba dam reduced drastically forcing the country to implement load shedding.

Many industries including the mines were affected. Several employees were laid off as companies scaled down staff due to fallen revenues.

The government has however, began upgrading power plants and building new ones to improve power supply.

The upgrade power sources include the Lunzuwa hydro power station near Mpulungu, Chishimba falls in Northern province of the country and Maamba with Ithezhi tezhi in Southern province.

Load shedding has since been reduced with consumers getting more hours of supply than darkness.

The government which was retained in the August election will therefore need huge resources to continue with development projects.

With the above analogy, the withdrawal of subsidies on fuel is just an indicator of more sacrifices to come and needed to  support a clearly sagging economy.

h-sikazweHicks Sikazwe is a Zambian journalist  with a Masters Degree in Mass Communications from the University of Leicester in the UK and  a BA in Communication Science from the University of South Africa, Pretoria. He is a former Deputy Editor in Chief of Times of Zambia,  the country’s oldest daily newspaper, where he worked for almost 30 years. He has written widely locally and abroad He has practiced journalism for close to 40 years. His  MA  thesis was on Media and Democracy.


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