AFTER the long awaited reduction of fuel prices by the Energy Regulation Board (ERB), the pressure has now turned on suppliers of goods and services as consumers want the cost of essential commodities reduced in line with the lowered cost of petroleum.
Consumer rights groups have already launched their campaign on service and commodity providers in sectors such as transport, manufacturing and food to see that the price of their products come down.
There has, however, been resistance by some service and commodity providers who have argued that it is difficult to rearrange the cost of their products in a free market economy like that of Zambia.
A free market economy is one where the government has little or no control on how the private-sector dominated market operates.
Under this arrangement, Government cannot dictate the price of a commodities such as mealie meal or tell bus operators how much to charge commuters on a particular route.
There is absolutely no price control on goods and services as the economy is liberalised for producers of goods and services to control upward and downward adjustments to commodity prices.
This is why there are few tangible benefits for a free market on a developing economy like Zambia, where the majority of consumers live on a shoe string budget.
The price of mealie meal therefore cannot come down automatically after the recent fall in fuel prices as there are other players in the system that must also have an input.
Millers contract transporters who ferry the commodity from the milling plants to the market at a cost settled by paid by the miller.
In view of the reduced fuel prices, it is the transporters who must act first to reduce the cost of transporting the commodity before the millers can to adjust the cost of the commodity.
Millers’ have their hands tied because they cannot reduce their prices ahead of transporters as this will lead them to incur additional costs that may result in loses.
For now, mealie meal prices remain at around K68 per 25 kilogramme bag of breakfast and K 52 per 25 kilogramme bag of roller meal.
This also applies for products like cement where retailers will take into consideration the cost of transporting the commodity from the cement factory to the consumer before prices can be adjusted.
Another issue that has been contentious after the reduction in fuel prices is that of bus and taxi fares.
Bus operators have publicly announced that bus fares on local routes may reduce by 40Ngwee owing to the reduction in fuel prices, which was K2.
This has been received with mixed feelings and major stakeholders including government have rejected the 40Ngwee reduction describing it as a mockery.
Indeed the 40 Ngwee adjustment is just too small when compared to the adjustment in fuel prices and bus operators can still work out the possibility of effecting a much reasonable decrease in fares.
In the meantime, commuters are still waiting to hear how much taxi operators will reduce fares by a “reasonable” margin.
It is the expectation or ordinary consumers that the price of all consumer goods and services
will reduce significantly owing to the lowered price of fuel.
Government needs to engage particularly millers and transporters to reduce the cost of mealie meal and bus and taxi fares on local routes respectively.
The Government also needs to work on eliminating economic forces that hinder the participation of additional players in the economy to enhance competition among producers of goods and services.
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