Subsidies. Decisions Have To Be Made

Zambia in the contemporary weeks has experienced massive debate on the emotive issue of the government decision to discontinue subsiding fuel and the agriculture sector. This decision has clearly sparked emotive  debate to an extent that an assortment of  sections of society have engaged in a range of debate in support of it and others completely against it to an extent of taking their displeasure to the streets in protest. Despite, the situation as it stands, the Government has made a decision in the interest of the nation. It should be first acknowledged that the Zambian industry in post independence era saw a preponderance of financial support or a subvention of many industries and products, from petrol to food.

 The Zambian government being the main player in the assisted many parastatals which by and large made losses year in year out were constantly assisted by the government. The financial support cut across agriculture, mining, transportation, oil and lubricants just to mention but a few. Despite all the support the Government made available to the different strata of industry, the resources appeared to be going into a bottomless pit with no tangible returns to show for it. On top of the subsidies, the government had to also converge its efforts to grow the education, health, or infrastructure sectors.  The continued financial support to sectors that appeared to be a resource drain led to the extent that the Government was forced to be borrowing to subsidize at a range of supply of inputs, manufacturing, distribution, and consumption. At the dawn of the 1991 wind of change and the eventual shift in economic policies of the Movement Multiparty Democracy (MMD) to a free market economy, subsidies were generally shelved but of course not completely. The agriculture, education and oil sector to date have been major beneficiaries of subsidies.  

The Government’s continued support to then oil and agriculture sector seems to have driven us back to the old days when resources would be poured in and at the end of the day losses are still incurred. This eventually means that the cost of fuel has been adjusted upwards and so will be the case for mealie meal. The question would be at whose expense should the continued support be? At the end of the day, the Government had to make a hard decision to either carry on with subsiding loss making ventures or abandon it.  Well, the subsidies were abandoned! This surely means that the savings from the huge subsidies have to be directed to other productive areas of the human endeavour. But again, could this perhaps be the Governments desire to minimize its extensive participation in a variety of economic activities? Indeed, there are many subsidies that are a sanctuary for inefficiencies. 

It is acknowledged that the upward adjustment in the cost of mealie meal and fuel has effects right from the lower strata to the most affluent our population. In reflecting on this very emotive topic, perhaps the Government should have implementation of the removal of the subsidies gradually at a minimal scale to avoid abrupt impact? Other schools of thought have suggested that perhaps the announcement of the discontinuation to agriculture subsidies should have waited until the consumers get over the shock of the removal of the fuel subsidy? 

It can be concluded that the two decisions the Government has made are in the best interest of the nation and as such may have positive benefits in the future. There is no Government that would deliberately want to hurt its people with harsh economic policies. The general populace should therefore be patient enough and allow for their upshots.