Government has spent a total of KR2.5 billion on fuel subsidies alone while the cost of maize subsidies has increased by 2,400 percent since the introduction of subsidies in 2009, Finance Minister Alexander Chikwanda has disclosed.
Mr. Chikwanda said government has in the past years been spending huge sums of money subsidizing the two commodities at the expense of pro-poor and tangible development programmes.
In a statement to ZANIS in Lusaka today, Mr. Chikwanda substantiate government’s decision to remove subsidies on maize and fuel saying the two were misdirected as they diverted resources from high priority areas.
He said there was need to analyze the high cost associated with the two subsidies to determine whether they could have been channeled to more important and beneficial programmes such as education, health and sanitation and social protection.
He said fazing-out subsidies on maize and fuel will benefit the poor people as it will free up resources for other economically and socially beneficial activities.
Mr. Chikwanda explained that on a comparative basis, the KR6.1 billion used on subsidies between 2010 and 2012 exceeds the budgetary allocation of KR4.5 billion to the Ministry of Health for the same period.
He noted that it was important for the nation to acknowledge that any subsidy provided by government implies redirecting resources from the provision of other goods and services.
He explained that before the subsidies were removed, they were worsening inequality in social warfare and perpetrating social injustice as they were only favouring the urban community which was not the most poor and vulnerable.
“Going forward, government is convinced that the subsidies were very inefficient because they hardly reached the intended beneficiaries nor provided the platform to lift the poor out of the poverty trap,” Mr. Chikwanda said.
Meanwhile, the Finance Minister maintained that government will continue to subsidise agricultural farming inputs, primary and university education and the public welfare assistance programmes.
Mr. Chikwanda noted that given the challenges and vulnerability that viable farmers face in accessing agricultural inputs and financing, government has decided to continue supporting 9,000 farmers through the Farmers Input Support Programme (FISP).
He further said apart from primary education, government will continue subsidising university education where public universities are charging below cost-reflective market fees with government meeting the difference.
He has since called on all citizens and friend of Zambia to support the Patriotic Front (PF) government in its effort to transform the economy and uphold strong economic growth in a sustainable manner.
Recently, government removed financial backing on fuel and maize, a situation that sparked mixed feelings among Zambians with some students, some civil society organizations and the church appealing to government to rescind its decision.