A financial expert warns the proposed 75% power hike by the national power company ZESCO will cripple the agriculture sector.
Financial analyst and management expert Richard Mbewe says the increase in power tariffs will trigger galloping inflation. “Everything that involves electricity, including agriculture, will see price increases. With everything going up, we will have a phenomenon called inflation, which will push production down,” says Mbewe.
ZESCO applied to the Energy Regulation Board (ERB) to allow it to increase the price of electricity by 50% next month and a further 25% in September. ZESCO argues that a power hike will stimulate growth of the energy sector by making it attractive for investors.
Mbewe dismissed this argument. He says the proposed increase won’t improve the situation as the whole economy will take a beating. “This will lead to layoffs in all sectors of the economy, thus increasing poverty and unemployment levels. This will defeat the purpose of increasing the tariffs in the first place,” he says.
The Millers Association of Zambia (MAZ) also believes the price of staple foods will rise as soon as the increases come into effect. MAZ president Andrew Chintala says the entire value chain of producing mealie-meal will be negatively impacted.
The concerns prompted frantic negotiations between the Zambia National Farmers Union (ZNFU) and the power company for rates which will keep agriculture viable.
The Energy Regulation Board is yet to sanction ZESCO’s proposed hikes.
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