Editor's Comment

Subsidies removal will rescue economy

THE removal of consumption subsidies on fuel is a matter that requires proper consideration to be well understood and appreciated.
As Minister of Finance Felix Mutati said in parliament yesterday, Zambia cannot continue spending as much as US$1 billion in subsidies in a year on non-productive areas.
Re-allocating the subsidies to more productive areas will better benefit the most vulnerable members of Zambia’s society.
Unfortunately, the real benefits for the people of Zambia of this action may not be fully or immediately understood, let alone appreciated, because the focus is on short-term effects.
As a prudent leader, President Edgar Lungu has accordingly advised well-meaning Zambians not to make political capital of the intervention and the increase of fuel prices, as they are necessary to improve the Zambian economy.
“So, for those who are crying, I hear you. And probably tomorrow things will be better,” he sagaciously counselled.
As would be expected, the cry is that there will be a spiral effect or chain reaction in the wake of the fuel price hike. This is indeed already being seen in the pending rise in bus fares.
These are economic shocks that should be expected in the short term. They indeed are bound to be painful, but Zambia has to collectively endure this challenge before sustainable benefits begin to show in the mid and long term.
Zambia cannot continue subsidising consumption and there is urgent need to begin using the limited resources on activities that will spur economic growth, generate jobs and generally improve the standards of living for every Zambian.
President Lungu’s assurance to the people of Zambia that the removal of subsidies on fuel is a well-meant undertaking must be appreciated. As he said shortly upon his return to Zambia from Madagascar on Wednesday, the removal of subisidies would benefit everyone in Zambia.
Government should particularly be commended for ensuring that the shocks of the subsidy removal do not hurt the poorest of the poor.
In his ministerial statement in parliament yesterday, Mr Mutati said that to cushion the impact of these economic adjustments, Government will increase budgetary allocation to social protection.
It makes a lot of sense to conceive of the withdrawal of subsidies in terms of mid-term and long-term benefits rather than short-term effects of the development.
One particular sector that is bound to significantly benefit from this economic decision is that of agriculture, which should become Zambia’s key to development and job creation.
We expect all Zambians to appreciate these economic initiatives that encourage production and not consumption.






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