This paper offers an alternative perspective to the motion on anti-abolition of subsidies.
We argue that during their existence, the fuel and electricity subsidies had benefitted the poor far less than they had done any other social groups in Zambia. Likewise, the abolition of the subsidies affected the poor less than it did other social groups. Of course, we have to bear in mind that most commentators will generally argue that any additional adverse effect on the poor, no matter how marginal, should be judged as worse than any effect on the non-poor, simply by virtue of the poor already being in a state of poverty and vulnerability. This is however a philosophical issue that is outside the scope of this paper. In this paper, we focus on the measurable impacts and find little additional direct adverse effects on the poor relative to the non-poor, mainly on account that the poor were largely already excluded from the benefits of the subsidies to begin with. Ultimately, we recommend a permanent replacement of the poorly targeted, broad-based or “blanket” fuel and electricity subsidies with well-targeted subsidy measures that reach specific poor sub-groups of the population. In particular, we argue for specific subsidies targeted towards social protection or poverty alleviation interventions.
