(3 minutes read)
- The Zambia Association of Manufacturers (ZAM) warned that if the price hikes for fuel and electricity were implemented, it would have a cascading effect on the economy
- It would increase the cost of production, cost of transportation and price of locally manufactured products, the Association said
The Zambia Association of Manufacturers (ZAM) warned that if the price hikes for fuel and electricity were implemented, it would have a cascading effect on the economy. It would increase the cost of production, cost of transportation and price of locally manufactured products, the Association said.
Association President Ashu Sagar said with the removal of subsidies on fuel and electricity, the price was bound to go up and the association perceived those steps as a hindrance to meeting the inflation targets in 2022 since fuel and electricity are key raw materials in the manufacturing sector and account for large costs in many production processes and supply chains.
Sagar said electricity in Zambia was already disrupted with erratic supply. Therefore, increasing the price of electricity coupled with load shedding would increase the operating costs of manufacturers significantly.
The increased cost would inevitably be passed on to the consumer in order to ensure the manufacturers remain profitable, contribute to government revenue and survive. Having been subjected to a turbulent period during the Covid-19 pandemic coupled with an unstable economic environment, ZAM was of the view that a phased removal of subsidies would allow manufacturers and consumers to have a smoother transition into higher costs than an outright full removal of subsidies.
