Electricity subsidies benefit the rich more than the poor. The richest Zambians currently receive nearly five times more in subsidies than the poor, according to a new research commissioned by Policy Monitoring and Research Centre (PMRC). Given how unfair the current subsidy is, the government’s aim of reforming subsidies by the end of 2017 is the right move. But care also needs to be taken to protect the poorest when subsidies are cut.
These conclusions are based on rigorous distributional analysis that will form part of PMRC’s forthcoming report considering the impact of removing electricity subsidies on individuals and businesses. This analysis has revealed stark findings that demonstrate the regressive nature of energy subsidies and the consequences of removing them.