Tag: inflation


Inflation Featured

Inflation is a source of concern whenever it rises.

One of the key contributors to inflation rising is the depreciation of the Kwacha, as our country is import dependent. This is a structural issue with the state of our economy.

To address this issue we need to focus on industrialization, import substitution, and local content policy for goods manufactured locally to ensure we don’t import broken down parts just to be assembled in Zambia.

As an example, if you go to Builders’ Warehouse, work suits are imported from South Africa. Why can’t we incentivize our textile industry? We should be able to do this because we grow enough cotton. Military uniforms are imported. Why can’t we manufacture them locally? So increasing local production and promoting new manufacturing plants to lessen dependence on imports is a key policy measure for us.

Secondly, we have serious reservations about how inflation is measured currently and we will revisit the calibration of goods and services included in the inflation basket.

We would like Zamstats to avail the list of goods and services included in the inflation basket publicly so we can assess the relevance and weightings assigned, to ensure their practicality.

As an example, is it a fair representation to have hairpieces in the inflation basket but exclude fuel on account of the fact that the fuel impact is represented through the prices of goods affected by fuel?

The whole measurement methodology for both GDP and Inflation needs to be revisited.

Fred M’membe

Increase of ZESCO electricity tariffs and prices of petroleum products

Increase of ZESCO electricity tariffs and prices of petroleum products

Press Statement for immediate release.

As it was expected, President Edgar Lungu’s government provided Zambians a toxic and painful New-year present: An increase in fuel prices by 10% as well as in electricity tariffs by 22% and 49% for domestic and commercial consumers respectively.

We foresaw it, we previously alluded to it, but much more significantly, we had warned against such a decision! Apparently, our well-meant advice continues to fall on deaf ears. As a result, the PF government is dragging Zambia into a calamity where public debt, currency depreciation, a failed food production system and energy crisis are combining to destroy millions of livelihoods. In the midst of all this, sheer incompetency and deep-rooted corruption make solutions seem impossible.

The drastic increases in electricity tariffs are supposed to help ZESCO operate efficiently and viably! The fact however remains that ZESCO is a political cashcow. The Petty-bourgeois political leadership of this country has continued to abuse this institution for decades. The privatisation of many other parastatals under the MMD government in the 1990s left ZESCO as a lone cash-cower. With elections coming in 2021, no serious transformation will be undertaken to change the status quo.

The Socialist Party also notes that the mining sector that consumes the biggest share of electricity, 50.9%, will continue paying the low tariffs it has continued to enjoy for years! It has been exempted from this tariff increase. It is impossible to tackle ZESCO’s economic woes, without addressing the pervasive arrangement and faulty logic underlying bulk purchasing.

The 49% commercial tariff increase will hurt business activities. This is especially the case for small-scale businesses that were on the verge of collapse due to erratic power supply. However, the commercial sector consumes only about 14% of the generated power but has, since 2015, continued to increase its installed self-generation capacity. It is the biggest buyer of voltage regulators, capacitors, power surge factor units, generators and off-grid solar plants. It has found ways of insulating itself from total collapse. It will also ultimately pass on the extra cost to the final consumer – adding to the inflationary pressures of the Zambian masses.

The domestic consumer of electricity is the biggest loser and victim of the tariff increase. A 200% increase is massive and immoral given all other economic constraints the Zambian masses are facing. It is apparent that President Edgar Lungu is choosing to protect the profit interests of the mines above the welfare and livelihoods of the Zambian masses.

If the aim of this decision is to send a signal message to the IMF and other donors that have insisted on economic viable tariffs, then it is far from achieving that objective – without drastic organisational changes to ZESCO and the faulty arrangements with the mines. If it is about attracting more foreign direct investment in the energy sector, then it is equally naïve. There is more to the creation of the requisite economic and legal environment than lopsided tarrif adjustments – the operators of Maamba Collieries can offer generous advice based on their experiences. It’s a shameful lesson in incompetency and arrogance of our policy makers.

The Socialist Party therefore demands the following:

1. An immediate withdrawal of the electricity tariff increase.
2. Dissolution of the ERB Board.
3. Postponement of tariff adjustments pending the completion of the proposed “cost of service study” that would help ascertain the real cost of producing power and the determination of appropriate tariffs.
4. Inclusion of the Mining sector in tariff adjustments.

Issued by:
Dr Cosmas Musumali on behalf of the Central Committee of the Socialist Party.

Socialist Party denounces IMF’s political, economic war against Venezuela

Socialist Party denounces IMF’s political, economic war against Venezuela

We have no doubt the announcement last Monday by the International Monetary Fund that Venezuela’s inflation could top one million per cent by the end of the year is part of the economic and political war being waged against the Bolivarian Revolution.
It’s intention is revealed by its timing. This is intended to destroy any hope in the possibility  of a reversal of economic fortunes in that country.
The IMF says the projections are based on calculations prepared by its staff, but warns that they have a degree of uncertainty greater than in other countries, “any changes between now December may include significant changes”.
Why make such a very serious statement with very devastating consequences on a country on such admittedly uncertain projections? The intention is to further strangulate Venezuela.
One just needs to consider a few glaring facts, extrapolate and use a bit of common sense to understand the nature, extent, principals and accomplices in this economic and political war being waged against Venezuela and their modus operandi.
We have not forgotten the scarcities that were introduced in an attempt to topple president Hugo Chavez after their coup of 2002 failed.
We have also not forgotten the  Obama decree declaring Venezuela a threat to United States national security and its intentions.
And Trump’s threats of military intervention and his financial sanctions against the Venezuelan oil industry are still ringing in our ears.
The purpose of all these pronouncements is to send signals to those still  doing business with Venezuela to pull out.
And this is what the International Monetary Fund is today trying to compound, escalate.
There’s an unending campaign to discredit the Venezuelan government and President Nicolas Maduro.
In short, there is a political motive behind the International Monetary Fund’s one million per cent inflation projections announcement.
We denounce all these measures that seek to overthrow the legitimate Government of President Maduro and plunder the resources of Venezuela.
In the face of ongoing attempts to depose the elected government of President Maduro and annihilate the Bolivarian Revolution, the Socialist Party (Zambia) reaffirms its support and solidarity with the Venezuelan people, their government and the Bolivarian Revolution.
The effects of the ongoing economic war against Venezuela is the main reason for inflation. They hope that this economic strangulation  may help turn the revolution’s base against the government. They purposely exaggerate the scale of the economic problems, while ignoring  the causes of this  problem.
For these reasons, the Socialist Party (Zambia) makes clear its opposition to the economic and political war being waged against Venezuela to overthrow the Maduro government and annihilate the Bolivarian Revolution.
The Socialist Party (Zambia) rejects any foreign intervention in Venezuela and calls on the International Monetary Fund to immediately halt its campaign against  Venezuela, which only seeks to aggravate the economic situation.
The Socialist Party views  the Bolivarian Revolution not only as a profound anti-capitalist struggle, but as a spearhead in the  global fight for a better world whose defeat would set back the peoples’ struggle not only in Venezuela but more broadly.
Now is the time to demonstrate our solidarity with Venezuela’s Bolivarian Revolution and defend the Maduro government against this imperialist  economic and political war.
Dr Fred M’membe is a journalist, an accountant, a lawyer with a Master’s degree in taxation and member of the International Bar Association’s taxes committee, an economist with a Master’s degree in economic policy management and holds a doctorate in Business Administration.