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Unstructured fuel increments shocking the economy – CSPRBy Mirriam Chabala on 21 Feb 2018
Civil Society for Poverty Reduction (CSPR) executive director Patrick Nshindano says government through the Energy Regulation Board should introduce a more structured way of adjusting fuel prices to avoid shocks in the economy.
And Nshindano says the Zambian manufacturing industry which is being promoted in the Seventh National Development Plan (7NDP) will not thrive if key drivers such as fuel remain expensive.
Commenting on the recent upward adjustment of fuel prices in an interview, Nshindano said that the adjustment would have an adverse impact on the poor and vulnerable people whose incomes are kept stagnant whil commodity prices rise.
“As CSPR, we feel that the increase in fuel process is going to have adverse effects on the economy and this is going to push up the cost of doing business, as you know fuel is the key ingredient in production. But this, later on, is also going to be translated into increase in the cost of living and that is our worry. Currently we are in an economic situation where the cost of living is extremely high, given the downturn of the economy which pushed up a number of prices. This is going to have a very negative impact on the poor and vulnerable because they will not be able to shield such an economic shock as their incomes do not equally rise at the same time,” Nshindano said.
“One of the things that government through ERB need to do is that they should ensure that they structure periodic reviews so that there could be a sense of predictability for consumers and not the level of arbitrary intervals that we are having currently. People need to plan, those on the economic side of things in business need to know that every two months or every quarter for example there is going to be this review and depending on the economic fundamentals, this might likely cause fuel prices which is an input, to go up or go down. And on the consumption side as well, people need to know that so much is going to change so that they adjust accordingly. But the way they are doing it right now is arbitrary, it’s harmful to the economy. They need to come up with a more structured way of doing that.”
He observed that Zambia had the most expensive fuel in the region.
“You will notice that the fuel here in Zambia is one of the most expensive when you compare to the region and this is very evident. You would see that even airlines that come to Zambia go and refuel in Zimbabwe and not here because of the high cost of fuel. This tells us something that within the region where we have similar cost structures in terms of procurement and so on, their fuel is much cheaper than ours. We have a problem and we need to look at inefficiencies within the procurement system. What channels are there that are able to bring the fuel to the country and we need to cut down on the costs associated with bringing fuel to the country, it’s very critical. But also we need to start looking at other avenues of sources of fuel,” Nshindano said.
Meanwhile, Nshindano said the Zambian manufacturing industry would not thrive if key drivers such as fuel remained expensive.
“Fuel being a key ingredient to production, has an impact on the productivity of the economy and if you look at domestic economy, it’s very infant in Zambia in terms of the domestic private sector. The Seventh National Development Plan (7NDP) is talking about promoting manufacturing and if you have key inputs such as fuel being extremely expensive then we do not expect the manufacturing industry to be able to thrive. So it’s important that government works on the facilitating mechanism that is going to make sure that the cost of doing business in Zambia in not high but affordable,” said Nshindano.
About Mirriam Chabala
Mirriam Chabala is a Zambian journalist who covers current affairs and writes in-depth feature articles on social issues.
Email: mirriam [at] diggers [dot] news
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