The Jesuit Center for Theological Reflection (JCTR) says the new fuel prices will translate into a lower cost of living for Zambians because Copper prices on the international market have continued to increase.
JCTR has however called on the government to reduce fuel prices further, adding that the recent reduction was too minimal for those in the transport sector to consider reducing transport costs.
In a statement today JCTR Media and Information officer Tendai Posiana noted that the appreciation of the local currency which had influenced the Energy Regulation Board (ERB)’s decision to adjust fuel prices downwards, would further translate into fall of import prices.
“The JCTR applauds the new fuel prices as this may translate to a lower cost of living in the long run. However, there is some uncertainty as to what is likely to be the scale of the impact on our economy, but we can be confident this is certainly good news. Additionally, we have noted the strengthening of the kwacha against other major currencies such as the US dollar. This is largely influenced by increases in the international copper prices, companies converting foreign exchange into the local currency in order to meet their tax obligations,” Posiana stated.
“The appreciation of the Kwacha should translate into fall of import Prices. Importing raw materials becomes cheaper which reduces production costs of firms. Due to reduced production costs the market becomes competitive and more firms enter into the market which results into employment creation for many Zambians. The Centre notes that the cost to mining companies will certainly go down and that should come as a welcome short term relief for the people of Solwezi who are likely to be employed in the mines as a result of increased profit to the mining houses.”
Posiana hoped that small businesses such as motorists would also welcome the changes arising from the reduction of fuel and consider reducing the transport fares even though she was not sure how.
“It is worth noting that fuel is a key production cost for many businesses and as such the reduction is good for the economy. What is more unclear is how this filters out to the rest of the economy to benefit common Zambia citizens. For example though one would expect public transport fares to fall hence reducing the cost of goods and services it is more difficult to predict by how much and if this will be implemented by transport operators. In the same vain an appreciation of the Kwacha tends to cause lower inflation because import prices become cheaper. The cost of imported goods and raw materials fall after an appreciation, e.g. price of imported oil decreases, leading to cheaper petrol prices,” she stated.
And Posiana stated that the selling prices for basic needs for a family of five living in Solwezi reduced following the appreciation of the local currency as of July, 2017.
“The July 2017 JCTR Basic Needs Basket (BNB) for a family of five living in Solwezi stood at K4,048.62 which was K68.22 less than the June BNB which stood at K4,116.84. The reduction in BNB can be attributed to reduction in food commodities like; mealie meal which reduced from K90.35 per 25kg bag in June to K78.22 per 25kg bag in July, Beans reduced from K16.34 per kg in June to K13.90 per kg in July, Dry Kapenta reduced from K149.87 per kg in June to K128.95 per kg in July, Onion reduced from K15.65 per kg in June to K12.97 per kg in July, Cooking Oil reduced from K45.17 per 2.5 L in June to K43.75 per 2.5L in July,” Posiana stated.
“Non-food items like soap increased from K6.60 in June to K8.67 in July, while Vaseline increased from K20.00 in June to K21.33 in July. The reduction in mealie meal prices can be attributed to the reduction in Maize prices. Prices for Soap and Vaseline have increased because high transportation costs as these items are brought in the province from Lusaka and Kitwe.”
JCTR implored government to reduce fuel prices further arguing that the current reduction was too minimal for those in the transport sector to consider reducing transport costs.
“As it has been stated by ERB, the cause of the reduction is the appreciation of the Kwacha and it is not certain on how sustainable this appreciation will be. The Centre hopes the Zambian government will ensure the trickle down benefit of low oil prices reach its citizens in North Western Province were prices of commodities are extremely high for the local people, many of whom are not in employment are deprived of basic needs,” stated Posiana.