The increase in the price of fuel as announced by Energy Regulation Board (ERB) will impact negatively on the economic status of Zambia in the short term.
ERB officially announced the upward adjustment or rather and increase in the pump price of fuel.
This increase saw petrol now costing K13.70 per litre from K9.873 and diesel is now costing K11.40 per litre from K8.59.
Marginally, the price of petrol and diesel have increased by K3.83 and K2.81 respectively.
ERB attributed the increase in fuel price to the volatility of the kwacha against the United States (U.S.) dollar.
It is evident that the kwacha, our legal currency has been volatile against the U.S. dollar, trading in the range of K9.98 and K10.01 in recent past.
Fuel is the heartbeat of most if not all economic activities especially in the transport sector.
This is because goods and services have to be transported from one place to another so that consumers can have access to them.
Whenever there is an increase in pump price of fuel, traders are quick to hike the price of essential commodities.
This has been the trend in our country. High cost of living will be the order of the day as consumers will pay exorbitant price on goods and services.
With the increment in the price of fuel and looming electricity tariff hike, the people should brace for hard economic times.
To mitigate the impact, there is need to stabilise the exchange rate between the kwacha and the U.S. dollar for instance.
However, this is attainable through diversification of the economy to sectors like agriculture and tourism rather than the sole dependence on copper, our major foreign exchange earner as the case is at the moment.
Agriculture and tourism if properly harnessed can improve our national economy and absorb external shocks such as low price of copper at the London Metal Exchange (LME) among other factors.
All things being equal, the impact of increase in the pump price of fuel will be felt by the majority Zambians with low disposable incomes or take home pay as it were.
Over and above, there is need for Government to do something about this scenario, by exploring ways of stabilising our currency.
Diversification of the economy is one of them as alluded earlier. Realistically speaking, there is no problem which is insurmountable and Zambia can one day come out of economic quagmire.
Elemiya Phiri, Lusaka