The rising cost of living in Zambia has sparked concerns about the economic policies of President Hakainde Hichilema’s administration and their impact on the local economy.
Silavwe Jackson, the President of Golden Party Zambia (GPZ), has issued a statement expressing that President Hichilema’s decision to increase the monetary policy rate (MPR) is perceived as an effort to reduce excess cash in the local economy. However, this move seems to be negatively affecting the informal local sector, which is a source of livelihood for many Zambians outside the formal job market.
The reduced circulation of money within the local economy has resulted in decreased sales for small and medium-sized businesses, while the overall cost of doing business continues to rise. This situation is particularly challenging for low-income individuals who rely on the informal sector, as they struggle to afford basic necessities like mealie meal, leading to reports of hunger and food insecurity.
The volatility of fuel prices is closely linked to foreign exchange rates and has significant consequences in an import-dependent economy where over 80% of products on the market are sourced from abroad. As long as the exchange rate fluctuates, Zambians are likely to feel the ripple effects of high living costs and increased business expenses.
Some observers suggest that addressing these economic variables with a long-term approach could provide relief to the majority of the population. One proposed solution is to increase the flow of money within the informal sector, potentially boosting disposable incomes for those outside the formal job sector. Reference is made to the economic policies of the late Mr. President RB as a possible model for this approach.
Another suggestion is to move away from the current practice of monthly fuel price reviews to a more predictable schedule, with perhaps only two price reviews in each half of the year, preferably in March and August. This could help stabilize fuel prices and mitigate their impact on the cost of living and business operations.
Overall, the statement by Silavwe Jackson highlights the challenges faced by many Zambians due to the rising cost of living and offers potential strategies for addressing these economic issues.