What explains high sugar prices in Zambia? This is an important question faced by the Zambian families who have to manage their household budget to cope with the rising cost of living. However, debates on sugar pricing are contentious. Any position taken on this topic would either receive substantial support and/or opposition from the relevant stakeholders like industry players, government, consumers etc. CUTS Lusaka felt the need to determine the cause of the high price of sugar and recently undertook a scoping study to look at the pricing and structural dynamics in the sugar industry.
The scoping study reviewed the existing research and evaluated the authenticity of the available secondary literatures. The aim of this scoping study was to identify the gaps in the available data and point at the possible areas of intervention for CUTS Lusaka in the sugar market.
The study highlighted that there is a need of further research in the sugar sector, especially focussing on the element of ‘cost determination’ at the various nodes of sugar supply chain. Following were felt to be the possible areas of research:
- Cost of production: The available studies are unclear on the cost of production across the sugar supply chain. This has led to the uncertainty in determining the reasons for high sugar prices. One exception is a report by Africa Competition Forum that attempts to account for the costs involved in distribution and transportation. In order to bring better clarity, there is a need to explore this issue in detail.
- Retail and wholesale prices: The scoping study undertook some preliminary research in three areas (Kasama, Lusaka and Mazabuka) to see if prices were being increased at the retail and wholesale level. The information gathered from this exercise suggests that the small scale retailers and wholesalers do not make much profit from sugar sales. Sugar merely acts as a crowd puller rather than a profit making commodity. This fact is shocking, as it highlights the need to inspect as to where, then in the supply chain the cost to sugar is added.
- Market Structure and Protection: Zambia sugar is the monopoly player in the sugar milling market with the market share of about 94 percent for industrial sugar production and 92 percent for household sugar. Previous studies have indicated that this market dominance could be a possible reason for the high sugar prices in Zambia. The scoping study by CUTS Lusaka, suggests that there is insufficient evidence in the previous studies to support this claim. These studies mostly cite a 2006 report by the Competition and Consumer Protection Commission (CCPC) as evidence of excessive pricing of sugar due to the market dominance of Zambia Sugar. The interaction with CCPC, during the scoping study, however, revealed that, even though CCPC acknowledges the high sugar prices but has not been able to establish that this has been due to excessive pricing. Further, research is therefore required to better understand this critical issue.
NEWS
Barclays unveils first Kwacha credit card
Barclays Bank has launched Zambia’s first ever Kwacha denominated credit card in the market that will enable the cardholder to purchase goods and services and pay for them at a later date. Governor, Bank of Zambia (BoZ), Michael Gondwe said that the launch of the first credit card in Zambia would contribute to sustainable growth of the banking sector. Dr Gondwe said affordable and innovative banking solutions play a critical role towards sustainable growth of the financial sector and that of the economy. Dr Gondwe said this was one of the instruments that could contribute to the promotion of financial inclusion.
Meanwhile, Barclays Bank Managing Director, Saviour Chibiya, said that credit cards revolutionised consumer spending habits and changed the face of business. Credit cards offer benefits ranging from purchasing goods and services that one can pay for at a later date to bringing in the element of convenience that eliminates the needs of carrying large sums of money when traveling.
(Source: Times of Zambia, 17.07.14)
ZICTA to complete towers in October
In the quest to improve access to mobile telecommunication in rural areas, the Zambia Information Communications Technology Authority (ZICTA) was expected to complete the construction of 169 new telecommunications towers in selected rural parts of the country by October 2014. Public Relations Manager of ZICTA, Ngabo Nankonde, said that the project would be completed at a total cost of more than K1million. “ZICTA has the mandate to bridge the digital divide between the rural and urban community and by October this year, we will be completing the construction of 169 communication towers in selected villages’ and chiefdoms for this purpose,” she said. Nankonde said the improvement to telecommunications infrastructure could not be over emphasised as it promoted business activities in rural areas and public access to mobile services.
(Source: Times of Zambia, 03.07.14)
Commuters’ rights book launched
The Competition and Consumer Protection Commission (CCPC) launched a commuter’s rights awareness booklet which aims at curbing unfair trading practices in the public transport subsector. The booklet aims to increase awareness among the public on unfair trading practices perpetrated by some bus operators on unsuspecting commuters.
The booklets have so far been launched in Lusaka, Ndola, Kitwe, Mongu, Kasama, Solwezi and Chipata. Public Relations Officer of CCPC, Hanford Chaaba, said that the booklet would educate both the commuters and the bus operators on their rights and obligations.
He said the bus operators would be enlightened on how to conduct their business while the commuters would have information regarding their rights and obligations under the Act. He said the Commission was prompted to launch the booklet because of increasing complaints received over the past years.
(Source: Times of Zambia, 09.09.14)
Increasing food prices in Chipata worry JCTR
The Jesuit Centre for Theological Reflection said that it is concerned with the rising food prices in Chipata district despite being the country’s major maize producer. Media and Information officer, Mwiinga Shimilimo said that the Eastern Province was a major producer of maize in the nation but had remained the third poorest region in the country. She disclosed that according to the latest research conducted between July and August by JCTR, Chipata district had recorded increased prices of foodstuff. Notable commodities that registered an increase in prices include mealie-meal, Kapenta and dried fish. The increase in prices of food is attributed to the lack of good trade and agricultural policy support to raise people’s living standards in rural areas. “Mealie-meal increased by K10 while Kapenta increased to K25 and dried fish to K50.
(Source: The Post Newspaper, 02.08.14)
Expansion of access to mobile money in
International Financial Cooperation (IFC), a member of the World Bank Group, has announced an advisory services agreement, valued at $1mn, with Airtel Zambia to increase access to mobile financial services in the Zambian market in order to strengthen financial inclusion. The overall aim of the three-year project is to assist Airtel Money Zambia in building a sustainable mobile money operation. IFC will provide market research and advisory services on agent network management and business strategy development.
The project is part of the Partnership for Financial Inclusion, a $37.4mn joint initiative of IFC and the MasterCard Foundation to expand microfinance and advance mobile financial services in sub-Saharan Africa.
(Lusaka Times, 19.08.2014)
Proflight launches new jet
Proflight Zambia will introduce a special 50-seater jet aircraft on its domestic routes and offer 50 percent discount on passenger fares for 50-year-old Zambians to mark Zambia’s Golden Jubilee celebrations. The airline will offer a 50 percent discount during October on a special second flight, for all 50-year-old passengers born in Zambia in year 1964.
The new jet Bombadier CRJ-200 plane would be in the country on September 29, in the current year and operate throughout October to assess the market. “The new jet will primarily operate on the Lusaka-Ndola morning and evening flights, but where demand is high it will also be used on the Solwezi, Mfuwe and Livingstone routes”, Cap Lemba said. Proflight, which celebrates 23 years of operation this year, flies from its base in Lusaka to Livingstone, Ndola, Kasama, Chipata, Mansa, Mfuwe, Solwezi and Lower Zambezi, as well as to Lilongwe in Malawi, and will begin flights to Kafue National Park following year.
(Times of Zambia, 16.09.2014)
Let’s avoid unsafe foodstuffs – CCPC
The Consumer Competition and Protection Commission (CCPC) has signed a memorandum of understanding (MoU) with the Zambia Bureau of Standards (ZABS) and the Lusaka City Council (LCC) to ensure that the bodies complement each other’s efforts to safeguard the public against unsafe foodstuffs. CCPC board chairperson Kelvin Bwalya said the collaboration of the three institutions will enhance consumer protection by ensuring that products being sold are clearly labelled and are in hygienic conditions. On the same occasion, CCPC Executive Director Chilufya Sampa said the partnership seeks to enhance collaboration on key public issues through investigations and raising public awareness on food safety. “The cooperation will go a long way to safeguard the public from consuming unsafe products and there is also need for more publicity to educate the masses about their rights and obligations… The public need to know where to go and who to complain to once they came across harmful foodstuffs”, he said.
(Zambia Daily Mail September 30.09.14)
Snapshots
CUTS ponders on standardisation of service charges of doctors
Recently, there has been a call to standardise the doctor’s service charges in various institutions to avoid overcharging patients. As a consumer body, CUTS Lusaka is of the view that standardising doctor’s service charges is an option that could be considered to help address the current high costs of accessing health care services in Zambia. Consumer abuses in the health care sector have become prevalent in the recent past. This may be due to the complexity of the evolving market trends and the need for players on the market to attract as many customers as possible. It has become apparent that this desire leads market players to engage in uncompetitive and unfair trading practices.
CUTS warns women over counterfeit beauty products
The increasing desire of most Zambian women to enhance their beauty is making them vulnerable targets for counterfeit products, CUTS said. It is important that women become cautious of the products they consume. Coordinator CUTS, Zambia, Simon Ng’ona said that the in-born desire by women to look beautiful should be complimented with a culture of caution when purchasing products. “The private sector is targeting women as a lucrative market hence the need to be alert”, he said. Among the products cited were beauty enhancing products, such as skin bleaching creams. He said a handful of forward-thinking companies with product lines that were historically considered male-dominated, such as electronics and automotive, are starting to redirect their design.
About the Newsletter
Consumer Watch newsletter is published with the objective of enhancing consumer welfare through sensitisation, information dissemination and capacity building of consumers, business entities and government. While addressing consumer concerns, the newsletter focuses on bringing out issues, such as violation of consumer rights and measures to be taken by the relevant authorities to protect stakeholders.
CUTS ARC will strive to support and lobby the Government and the stakeholders to ensure resumption of the process to eventually enact a functional Consumer Protection Law in the country and also establish a functional institutional mechanism to implement the law. This is in line with the changes taking place in other countries in the region in the wake of globalisation and liberalisation. Apart from carrying consumer-related information, the publication will also give an analysis on current consumer concerns in the country.