ZAMBIA MUST STOP IMPORTING FUEL PRICE SHOCKS: WE NEED A NATIONAL ECONOMIC DEFENCE STRATEGY {THE PEOPLE’S ECONOMICS}
No nation can build a productive and competitive economy when the cost of its most essential energy inputs is constantly rising, but Zambia continues to subject its farmers, manufacturers, transporters and households to repeated fuel price increases, effectively importing global economic shocks and passing their consequences directly to the people. Every increase in fuel prices triggers a chain reaction, ie, production becomes more expensive, transport costs rise, food prices escalate, businesses lose competitiveness and household purchasing power declines. This is not merely a petroleum pricing problem. It is a direct threat to national productivity, economic growth and the cost of living.
Zambia must stop treating international fuel price shocks as an unavoidable domestic economic burden. We cannot control wars in the Middle East, the Russia/Ukraine conflict or fluctuations in global petroleum markets, but we can control how we organise our petroleum supply system, manage domestic costs and protect our economy. What is missing is not the capacity to act, but a comprehensive national economic defence strategy.
I am a student of history and I love history. Speaker Amusa Mwanamwambwa Z”L usually gave me chance to be the first to debate so that I could lay the historical context on important national matters. When Zambia faced petroleum supply challenges following Rhodesia’s Unilateral Declaration of Independence in 1965, our founding leaders worked with Tanzania to construct the TAZAMA pipeline, completed in 1968 and expanded during the early 1970s. Zambia also established its petroleum refinery in Ndola (INDENI) in 1973. These were strategic investments in national economic security. That generation confronted external threats by building solutions. Ours must do the same. I personally dislike the “business as usual” mentality
International petroleum prices and exchange rate movements influence Zambia’s fuel costs, but our pricing system also incorporates domestic taxes, transportation charges, storage costs, levies and commercial margins. These are areas where deliberate policy can reduce costs and cushion the economy. We need a National Fuel Price Stabilisation and Cost Reduction Strategy built around seven practical interventions.
First, reduce petroleum taxes and levies. Government must review excise duties, VAT and other charges with the objective of reducing pump prices. Affordable fuel stimulates agriculture, manufacturing, transport and commerce. The resulting expansion in economic activity can broaden the tax base and help offset some of the revenue forgone.
Second, establish a National Fuel Price Stabilisation Fund. Resources accumulated during favourable market conditions should cushion consumers against exceptional international price increases. Zambia needs a predictable pricing framework that prevents every temporary global shock from being immediately passed on to households and businesses.
Third, reform petroleum procurement. Competitive bulk purchasing, diversified suppliers, efficient transportation and the elimination of unnecessary intermediaries can reduce the landed cost of fuel. Government must scrutinise every component of the petroleum pricing structure.
Fourth, strengthen strategic petroleum reserves. Adequate national stocks would provide greater security against international supply disruptions and reduce the pressure for abrupt price adjustments during temporary shortages.
Fifth, accelerate the Angola/Zambia petroleum pipeline. This long discussed project must become a strategic priority. An additional supply corridor through Angola would strengthen Zambia’s energy security, diversify import routes and create opportunities to reduce transportation costs.
Sixth, establish three strategic petroleum refining and distribution centres. This has long been part of the United Progressive People (UPP) economic development programme.
1. Choma Refinery
Serving Southern, Lusaka, Eastern and Western provinces, supporting agriculture, industry, transportation and the Livingstone tourism corridor.
2. Mpika Refinery
Serving Muchinga, Northern, Luapula and Central provinces, strengthening the northern agricultural, commercial and industrial economy.
3. Ndola Refinery (INDENI)
Serving Copperbelt and North Western provinces, particularly the mining and industrial sectors. These facilities, supported by an expanded pipeline and storage network, would decentralise petroleum distribution, reduce unnecessary long distance transportation and strengthen regional economic development.
Seventh, treat affordable fuel as an instrument of economic growth. Fuel is not merely a taxable commodity. It is a fundamental input into national production. When diesel becomes cheaper, farmers can cultivate more land, manufacturers can produce at lower costs and transporters can move goods more affordably. Increased production creates employment, expands trade and generates additional tax revenues across the economy. Government must therefore consider the wider economic benefits of lower fuel prices rather than focusing exclusively on revenue collected from every litre sold. Any reduction in petroleum taxes should be supported by responsible fiscal management.
TAZAMA demonstrated that Zambia could overcome serious external challenges through strategic investment. We must now build upon that legacy with modern infrastructure, diversified supply corridors, competitive procurement and effective price stabilisation. Zambia cannot control international oil markets, but we can control how effectively our economy is protected from their shocks. A national petroleum defence strategy is no longer optional. It is an economic necessity.
Saviour Chishimba
(Yehudah Ben David)
Founder & Principal
THE PEOPLE’S ACADEMY