Zambia is on the brink of an economic crisis as the recent approval of increased electricity tariffs, and fuel costs are set to take a toll on the already struggling economy. Economist Trevor Hambayi predicts that the adjustments in the energy sector will lead to a higher cost of living, which will affect ordinary Zambians’ ability to purchase goods and services.
The Energy Regulation Board (ERB) approved ZESCO’s increment of tariffs by 10% amid crippling power cuts after increasing the price of petrol by K4, diesel by 0.8 Ngwee, kerosene by K7. 95 and Jet A-1 by K3. 30 for the month of May, 2024. Hambayi warns that inflation is likely to go up, which will reduce the value of the country’s currency.
Hambayi stresses that the country must focus on fostering GDP growth, which will lead to increased productivity and enable the ordinary Zambians to earn additional income. He calls for the implementation of an economic recovery plan that will directly alter the dire living conditions of the people.
He said one of the factors hindering the progression of inflation is the price of crude oil on the international market, which might increase further to a hundred dollars per barrel.
He believes that the country needs to take drastic measures, such as putting exchange controls and restrictions on outbound money.
Zambia must sign long-term agreements on crude oil prices to have it for a long time without changing the price. If the country doesn’t have long-term stock, Hambayi suggests forward contracts to lock the price.
He has urged the Zambian government must take urgent and necessary measures to alleviate the burden of increased electricity tariffs and fuel costs on ordinary Zambians.
He said the country needs to foster GDP growth, increase productivity, and sign long-term agreements on crude oil prices to prevent further inflation and reduce the cost of living. “Failure to do so will result in unbearable living conditions for most Zambians.”
“We need to take drastic measures that are painful for the country, we must put exchange control, restrictions as to what money can go out of the country and we must sign long-term agreements as to the price of crude oil so that we can have it for a long time without changing the price, if we don’t have long term stock we need forward contracts to lock the price,” he said
