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 June 2015 – Wages and Cost of Living


JCTR Press Release June 2015The issue of wages has been debated upon numerous times. This is mainly because the cost of living and monthly wages do not correspond with each other. This calls for salary reviews by both public and private sector employers. In doing this, social and economic variables should be considered that affect the employer as well as the employee.

The cost of living for the month of May 2015 as calculated by JCTR’s Basic Needs Basket (BNB) for an average family of five in Ndola, Luanshya, Kitwe and Mansa and Solwezi, indicates that the cost of living has fluctuated. Some towns have experienced an increase and others have experienced a decrease in the cost of living. These variations could have an adverse effect on the living conditions of people leaving in these areas especially in cases where salaries are unable to meet these increased costs.

The BNB for Kitwe for May stood at K2, 773.53 showing an increase of K282.29. This increase in the cost of living is attributed to the availability of certain commodities (Kapenta and Dry fish) that were unavailable in the previous month in markets visited. The BNB for Mansa in May stood at K2, 485.16, indicating an increase of K12.75 while that of Solwezi was calculated at K3, 232.96 in May, showing a minimal increase of K1.20.

In terms of BNBs showing reductions, the BNB for Ndola this May stood at K3, 494.79 showing a reduction of K110.23. The reduction is attributed to the cost of Dry Fish by K104.28, Kapenta by K14.28 and Beans by K3.34. While the Luanshya BNB in May was calculated at K2, 607.74 showing a reduction of K23.50.

Despite recording a reduction in the cost of living, residents of Ndola and Luanshya still have difficulties in affording basic needs, as in most instances, monthly incomes do not correspond to the cost of living. It should be noted that wages that allow employees meet their basic needs not only acts as a motivator for improved performance at work but gives the employee the chance to provide for their family. Thus improving the welfare (access to education, health and other social amenities) of more than just one community member and giving dignity to their lives.

Keeping in mind the cost of living and the need for basic commodities, JCTR appeals to the government to strengthen its laws on wages, especially the minimum wage. We also urge private sector employers and employees to reach a fair consensus on wages. Further as a way of mitigating costs at household level, household should look for ways to diversify their incomes and minimize expenditures e.g. through setting up vegetable gardens. Employers and employees also need to work together to set up ways in which they could be more productive as this will raise revenues and allow for higher wages to employees.

Kitwe 2015 May BNB Press Release

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.

December 2014 JCTR – BNB and Press Release – Zambia


JCTR LusakaBread basket November 2014Press Release 11th December 2014

Fuel Pump Price Reduction Insignificant Says the JCTR

The Jesuit Centre for Theological Reflection has dismissed the recent fuel pump price reductions in the country as being insignificant and too marginal. Whereas the price of crude oil on the international market has dropped significantly around 27 Percent during the last half of the year on account of oversupply originating from international stock build-up from the steady increase in fuel self – sufficiency of the United States as the highest international consumer.

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November 2014 JCTR – BNB and Press Release – Zambia


JCTR LusakaGreetings from JCTR,
We are happy as always to share with you the end of October 2014 Basic Needs Basket for Lusaka and accompanying Press Release. We hope this information is helpful for you.
Mwiinga Shimilimo (Miss), Media and Information Officer
Press Release, 7th November 2014
PROMOTION OS SOCIAL JUSTICE MUST LIVE ON SAYS JCTR
As Zambia mourns the passing of the late president H.E Michael Chilufya Sata, it is important to acknowledge the strides made by the late president and the PF government in the area of infrastructure development and efforts to enable workers afford a decent cost of living by implementing the minimum wage and raising the tax free threshold. It goes without saying that the efforts made will go a long way in boosting the positive economic growth that the country has been experiencing for the past 10 years. However for this growth to have lasting benefits it must significantly translate into poverty alleviation for the majority of Zambians that are living in poverty. The high poverty levels of 60.5% living below the poverty line indicate the extent of hardships currently being experienced by households in accessing basic needs and these hardships are much more severe in the rural parts of Zambia where 77.9% of the population are living in poverty.
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JCTR BASIC NEEDS BASKET: LUSAKA

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