Increased Interest Rates amidst Rising Inflation Worrying. JCTR ZAMBIA Press Release 11th November, 2015


JCTR Website LogoThe Central Statistical Office in its October press release announced an increase in inflation of 6.6 percentage points. The October inflation of 14.3 percent is almost double the September inflation of 7.7 percent. The sharp increased has been blamed on the depreciating Kwacha. To many Zambians, the increase is not a surprise but a confirmation of the escalating commodity prices most of which have more than doubled in the last few weeks.

The October Basic Needs Basket for a family of five living in Lusaka as measured by the Jesuit Centre for Theological Reflection (JCTR) exhibited a very similar trend reflecting an increase of K302.1 from K3, 957.46 in September to K4, 249.56. Costs contributing to this was almost all of the food commodities (i.e. 12 out of the 15 food items had seen a rise in cost, the highest being that of Kapenta that saw a K50 increase). In comparison to the Lusaka October 2014 BNB (which stood at K3, 635.83) there has been a rise of over K600 (16.8% increase). It is also the first time that the Lusaka Basic Needs Basket has breached the K4, 000 barrier and thus a cause for concern to JCTR. This development is of great concern especially that the depreciation of the Kwacha continues unabated. The continued deficit in energy supply and the resultant decline in productivity will make recovery in cost of living even more difficult.  

In response to the rising inflation Bank of Zambia has raised the policy rate from 12.5 percent to 15.5 percent and also lifted the cap on lending rates by commercial banks. This monetary policy instrument is meant to curb the rising inflation and keep it within the single digit target for the year.  This raises one key concern in the midst of rising cost of doing business and declining productivity. While the policy may slow down inflation in the short run, it may further stifle productivity as investors hold back their investment due to increased cost of credit. Reduced productivity may in turn result in inflation through reduced supply of commodities. The Bank of Zambia should therefore balance well the need for low inflation and sustaining productivity. The move to raise interest rates will also hurt individuals with personal loans that have flexible interest rates as they will be required to repay their loans at the new rates. 

At a time of crisis like this the JCTR urges government to combine well its policy response to the current economic situation and not always trying to find quick fixes. Recently Government offloaded its reserves on to the market to protect the Kwacha from further depreciation but the Kwacha continues to depreciate and is currently trading at 14.02 (as noted on BoZ website). While these measures may yield temporal relief by way of dealing with the symptom of the problem and not the cause, Government needs to look at the bigger picture by devising long term solutions that lie in diversifying the economy. Raising of interest rate does not seem to be a good recipe for this long term approach to addressing the country’s current economic challenges such as improving value addition and growing our manufacturing industry.

JCTR Press Release April 2015 – Mealie Meal in Zambia


JCTR March 2015

It is without doubt that strides towards reducing the cost of mealie meal have been made by the Patriotic Front (PF) government through the Ministry of Agriculture and Livestock.

Recently, the government through the Food Reserve Agency (FRA) offloaded maize onto the domestic market at a discounted price of K65 from the previous price of K76 per 50kg bag in an attempt to influence reduction in mealie meal prices. Government has also held negotiation meetings with milling companies to see how best this can be actualized.

Citizens were highly expectant when the government announced that this would lead to a reduction in mealie meal prices by K4 even though marginal. This is also at the backdrop of a 2014 maize bumper harvest that Zambia experienced. Despite these measures, the expected price reduction has not been fully realized. The JCTR’s Basic Needs Basket for Lusaka for March 2015 shows an increase in average mealie meal prices by K1.15 per 25kg bag. According to the JCTR’s Basic Needs Basket Mpika and Luanshya are two other towns that have also recorded an average increase of mealie meal prices of K6.04 and K0.38 respectively. In some areas, mealie meal prices have remained static. For instance in Chipata, Chinsali and Kasama prices still averaged K81, K80 and K74.60 per 25Kg bag respectively. In Livingstone, Choma, Kitwe and Mansa mealie meal prices have slightly reduced from the previous month of February by K1.08, K2.38, K1.32 and K2.05 respectively.

The JCTR is concerned about the current state of mealie meal prices and the cost of living in general. The cost of living for the month of March 2015 as measured by JCTR’s Basic

Needs Basket (BNB) for an average family of five living in Lusaka is K3, 797.55. This shows an increase of K29.87 as compared to February’s BNB which stood at K3, 767.68. The increase in the BNB is mainly attributed to the increase in prices of the following food items; Beans and Beef which increased by K11.61 and K3.00 respectively. In contrast, other commodities showed decrease in price namely, Charcoal, Tomatoes and Vaseline.

The JCTR would like to appeal to government to implement comprehensive package of measures that will effectively address the high cost of living in general and the high mealie meal prices in particular. Government should for instance speed up the setting up of milling plants in rural areas and also offer incentives to local business entrepreneurs to set up milling plants. This will not only result in mealie meal price reduction but promote local business ownership and sustainability. Government must also work with various stakeholders towards reviewing and diversifying the Farmer Input Support Programme (FISP) to make it more efficient in reaching the intended beneficiaries-the poor and guaranteeing that the Programme indeed achieves its purpose of poverty reduction.

BNB March 2015

CJTR Press Release January 2015


Press Release Jan 2015CLEAR POLICY DIRECTION AND IMPLEMENTATION NEEDED IN THE MINING INDUSTRY

As the year begins with the election of a new President and appointment of a new cabinet, it remains to be seen how the economy will be steered to the end of the year. A weakening Kwacha and a slump in copper prices on the local and international fronts respectively could be indicative of a bumpy year ahead of us. It therefore calls for level headed leadership to navigate these challenges. The leadership that has been exhibited on the impasse surrounding the new mining tax regime however does not inspire confidence and is a source of concern to the Jesuit Centre for Theological Reflection (JCTR). It is not clear if the new mining tax regime announced in the 2015 budget is subject to negotiation and who is charge of the negotiation.

This is of serious concern for the Centre due to its adverse impacts on the livelihoods of the mine workers as well as government revenues.  On one hand the jobs of many hang in the balance as the mining companies leverage them for a more favourable tax regime while on the other hand Government’s 2015 budget risks being unbalanced. There is therefore need for good leadership and consistent economic policy from the new Government even as they settle down. The conflicting statements from the President, the Minister of Finance and the Minister of Commerce on the new mining tax regime as to whether to subject it to revision do not reflect well on the Government and risk the stability of the economy and cost of living for the majority Zambians. It should be realised that lives of people are at stake and so care must be taken in handling the issue of mining tax.

The January 2015 Basic Needs Basket for Lusaka stood at K3, 793.59. This shows a significant decrease of K111.63 from the month of December 2014 which stood at K3, 905.22. This can be easily attributed to decreases in the cost of food items such as that of Kapenta which decreased by K67.65 from an average unit cost of K139.08 to K114.90 per kg, Dry fish which decreased by K34.10 from K124.81 to K78.22 per Kg and Beans which reduced by K16.03 from K32.89 to K25.51 per Kg.  Looking at the food items that have led to this significant decrease it can be said that these are due to seasonal changes which at any moment could vary again.

The JCTR therefore calls on government to come up with a clear direction for mining taxation as this could help ease the troubles currently being faced with the falling Kwacha and eminent rising interest rates that would further push up costs of various items on the Basic Needs Basket. Government should also be concise and comprehensive in reducing the cost of living, not just in the short term (e.g. during time of elections) but to find lasting solutions for these inconsistencies in the cost of living.

BNB and JCTR Press Release on the Proposed 2015 Budget


JCTR Website LogoGreetings from JCTR,
We are happy as always to share with you the 2014 September Basic Needs Basket for Lusaka and accompanying Press Releases about our pre and post 2015 budget position. We hope this information is helpful for you.
To get more on this and other JCTR activities, please visit our Website. We also invite you to visit our well stocked resource room for your research and other information needs.
Do not hesitate to contact us if you have questions, requests or comments. We always appreciate your feedback on how you are using the Basket.
Mwiinga Shimilimo (Miss)
Media and Information Officer
Basic Needs Basket for Chipata
Basic Needs Basket for Kasama
Basic Needs Basket for Kitwe
Basic Needs Basket for Mongu
Basic Needs Basket for Ndola

JCTR Press Release 21th January 2014


JCTR Lusaka2013 Showed a Mixed Picture in Economic Performance
The year 2013 had its ups and downs in terms of the cost of living as measured by the Jesuit Centre for Theological Reflection’s (JCTR’s) Basic Needs Basket.  A continued concern for the JCTR in 2013 is the persistently high cost of living. In 2013, the high cost of living stemmed mainly from high food prices. As a faith based organisation, to see the poor access their basic needs and rights, such as the right to food, is cardinal to improving living conditions and hence reducing poverty in Zambia. FULL TEXT