18th December 2021
The Crux of the Matter – Fuel Hike
As of midnight 16 December 2021, fuel has been hiked. The price of petrol has increased by K3.54 (20%) while that of diesel, by K4.56 (29.2%). This, the nation has been informed, is as a result of removal of $67m per month subsidies that the government was spending in this sector alone.
Social media is abuzz with this, with a lot of people expressing their shock and outrage.
But why are Zambians so upset with this move?
Is having subsidies a good thing? Or is it something that negatively impacts on the economy?
This discussion is at 2 (probably more) levels –
i. the technical or economic side of things and
ii. the moral side of things.
The Technical Side
In economics, there is no right or wrong answer. Situation analysis need to be undertaken and decisions made based on the circumstances that affect the nation.
Subsidies are and can be tools used to achieve a desired result – If you would like to grow a section of the economy and you would like to spur or jumpstart the players therein, you will use, amongst other things, subsidies to achieve your end. Subsidies in the fuel sector have been used in Zambia to not only cushion the poor but also to encourage growth of much needed industries as fuel is a cross cutting requirement in all sectors.
But subsidies, can also be an unnecessary drain on stretched resources and will be lifted if it is found that the negatives of having subsidies outweigh the positives.
So as can be seen there are positives and negatives attached to having subsidies.
So let us come to this present scenario. Of course there are some arguing for and some arguing against this ‘lifting’ of subsidies.
There are questions that need to be asked – and rightly so – by Zambians and which the Government should answer.
1. Is this action we have taken ‘the line of best fit’ for Zambia, Zambians and even for the UPND themselves as the party in Government?
2. Is the price increase the real cost borne by Government? Have we considered removing the inefficiencies from the equation prior to arriving at this increase?
3. Could the Government kindly share their situation analysis that they used, firstly, to arrive at the decision to lift subsidies and secondly, to arrive at the actual increment.
Transparency at how the two decisions of i) lifting the subsidies and ii) the how the quantum of the increment were arrived at, will be very helpful.
The Moral Side – This is the Crux of the Matter!
Zambians are overly upset with the decision to hike the cost of fuel.
This is so due to the fact that they were expecting, as promised, a K4 (four Kwacha) reduction in fuel but are instead getting a K4 (four Kwacha) increase. This is a mental variance of K8. (eight Kwacha) in terms of expectation!!!! So where a person with a 70 litre vehicle was expecting a full tank of K840, they now have to pay K1,400 per full tank.
Never mind about whether a good technical decision has been made or not, what has upset Zambians the most is the fact that they were promised, in no uncertain terms, a reduction in fuel and electricity tariffs and are instead -within 4 months – getting a hefty increase.
Zambians were taken for a ride and have indeed been fixed. We were shown by the UPND how the fuel would be reduced to K12. Our learned colleagues in the UPND can not today claim that they had no inkling of an idea of what was pertaining in the fuel sector.
What is upsetting Zambians the most is the fact that they were ‘Zoomed’ by the party in power and are only now waking up to that fact.
Zambians will not be ‘Zoomed’ all the time.
#LetZambiansWin
CHISHALA KATEKA
PRESIDENT – NEW HERITAGE PARTY