By Oliver Chisenga
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, says Chishala Kateka.
In a statement titled ‘The Crux of the Matter – Fuel Hike’, Kateka, the New Heritage Party leader wondered why Zambians were so upset with the 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,” Kateka said. “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?”
She said the issue had many dimensions, the technical and the moral side.
Debating the technical side, Kateka said in economics, there is no right or wrong answer.
She added that a situation analysis needed to be undertaken and decisions made based on the circumstances that affected the nation.
“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,” Kateka said. “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.”
Kateka however said there were questions needed to be asked by Zambians.
“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.
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?” she said. “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?
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.”
Kateka said the moral side of the issue at hand was the crux of the matter.
She noted that Zambians were overly upset with the decision to hike the cost of fuel.
Kateka said Zambians were upset because they were expecting, as promised, a K4 reduction in fuel prices.
“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,” said Kateka.
“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.
We were shown by the UPND how the fuel would be reduced to K12. Our learned colleagues in the UPND cannot today claim that they had no inkling of an idea of what was pertaining in the fuel sector. Zambians will not be ‘zoomed’ all the time.”