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Monday, 3 February 2014

Prices are rising!

Life continues to be challenging for many of our people. And all the signs are pointing to even greater challenges in the future as things become even more expensive.

The price of maize is up!

A 25kg of breakfast mealie is now in the region of K70 - K80 in many parts of the country. This is at least K25k - K30 more than it cost last year (K55) or 40-50% increase in the price, far above the general rise in inflation of 7%. The price of maize had been expected to reduce to around K65 (20% higher than last year) following a GRZ directive and FRA releasing 50,000 tonnes on the market and A , but in many urban areas retailers have maintained it at around K75. (Source : Post, Daily Mail, MuviTV)

The reason for the high prices varies depending on who you talk to. Government blames millers and retailers for encouraging artificial price fixing and illegal exports of maize. The farmers and millers say Government is failing to manage the agriculture sector. The millers have said the increase in prices of mealie-meal is as a result of the increase in the cost of maize, which the FRA is selling at K1,700 per metric tonne. Any reduction in the FRA price will lead to more losses for FRA.

The price of water is also up!

The National Water Supply and Sanitation Council (NWASCO) recently approved an average of 10 per cent tariff adjustment for all water utilities countrywide effective February 1, 2014 on a three-year tier system to January 31, 2015.tier system to January 31, 2015. This means for areas and customers the increase is sharper than 10%. For example, Nkana Water and Sewerage Company has increased its prices by over 15 percent for domestic metered customers while that of commercial customers is above nine percent (Source: Times, Daily Mail)

These increases come against a backdrop of poor water and sanitation services. There also appears little proper consultation by NWASCO before the increases. In Livingstone SWASCO has been failing to provide water in many areas of Livingstone on 24-hour basis while some areas only receive water in the night, yet the city is near the Zambezi River. The situation is similar in many parts of the country. Many water utilities are riddled with corruption, poor management and poor regulation.. The entire sector remains on life support surviving mainly on foreign aid and sporadic government grants. .

The price of electricity is also going up!

The Energy Regulation Board (ERB) has completed reviewing proposed tariff increases by ZESCO. The proposal is to increase tariffs by an average of 26 percent effected anytime in 2014. In November 2013, Energy Minister Christopher Yaluma indicated that the approved increased in ZESCO electricity tariffs would be below the proposed 26 percent increment. The ERB has not formally announced the exact tariffs but it is thought that the electricity prices will soon go up by at least 20%. (Source : QFM)

The general picture for urban consumers suggests that those public service who danced in face of the wage increases (within the range of 4% - 200%, with an average increase of 50%) are increasingly discovering that their wages are being swallowed up the rise in prices of key commodities. I suppose the silver lining is that 70% of the population live on less than $2 or day have no access to good sanitation and water or electricity. So increases in those areas wont affect them. They still have to buy maize though.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013


  1. is this price of $1,700 per mt for maize. it appears to be a mistake. if not who can be buying at that price.

    1. You are correct. It should read K1,700. That has been corrected now.

  2. Hi,

    Of course prices are up, because following the neoliberal ideology, they have removed subsidies for maize.

    In true neoliberal elitist fashion, subsidies are only good for the super wealthy, but will 'distort market mechanisms' if they are given to the poor.

    Supply side above everything, and damn the demand side of the economy.

    (IRIN NEWS)Removing subsidies in Zambia - the way to go?

    JOHANNESBURG, 30 September 2013 (IRIN) - The Zambian government has removed subsidies for farmers and millers because the expenditure is perceived as draining the country’s resources. Fuel subsidies have also been removed, and the combined loss of assistance is pushing up the price of maize meal, a staple foodstuff in the Zambian diet.

    Removal of the subsidy is just one in a series of similar moves by Zambian President Michael Sata, who is known for taking a tough stance on issues ranging from Chinese investors, whom he has threatened to deport, to fuel subsidies, which have been removed on the ground that their US$200 million annual cost would be better spent on health and education.

    The loss of subsidies for farmers has angered the Zambian National Farmers’ Union (ZNFU), which said the move was “ill-timed”. Inadequate rains, an attack of army worms that forced many farmers to replant, and the late delivery of subsidized fertilizers have already affected the 2011/12 harvest. ZNFU warned that any reduction in support for beleaguered Zambian farmers could threaten maize production and national food security.


    I think the problem is that this neoliberal ideology of favouring the supply side of the economy at the detriment to the demand side, is conditional on continued support from the IMF and World Bank - who of course are never anywhere near, to take the blame for the effects of their policies.

    Being dependent on the IMF/World Bank for their money, and therefore their policies, is a big reason why there is no response by the state, to the demands of the people.

    And that is worldwide, because even the Greeks weren't allowed a vote on the matter - their PM Papandreou was removed, and replaced by Lucas Papademos, a lifelong banker and chief economist of the 'Greek' Central Bank, and VP of the European Central Bank.

    This ideology has to end. Tax the mines, end reliance on the IMF/World Bank.

    Maybe that can be done collectively at the SADC level, to avoid the kind of retaliation that was meted out against Zimbabwe. (Like ZDERAm Section 4 (C), Mulilateral Financing Restriction.)

    However I doubt that any of the current leadership or opposition have the stomach for that fight.


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