Private Sector Development Association (PSD) says addressing high energy costs is critical if Zambia is to revive manufacturing, expand industry and create sustainable jobs.
Speaking in an interview with Money News, Association Chairperson Yusuf Dodia notes that high fuel prices and electricity tariffs remain the biggest obstacles to private sector growth in Zambia despite improvements in the country’s investment climate.
Mr. Dodia acknowledged that government has created an enabling atmosphere for both local and foreign investment.
He, however, stressed that the cost of doing business continues to undermine industrial expansion and competitiveness.
“The biggest challenge we have in Zambia is the cost of doing business. Fuel prices are too high. Electricity tariffs are too high. With those two being high, whatever you do for the private sector, they will never grow,” he said.
Mr. Dodia noted that production costs in Zambia are significantly higher than in neighbouring countries such as Zimbabwe, South Africa, Kenya and Tanzania, making locally produced goods less competitive in the regional market.
He argued that the commercialization of the energy sector has contributed to the high cost structure, warning that without affordable energy, Zambia’s industrial base will continue to shrink.
Mr. Dodia cited fuel pricing trends as an example, noting that despite improvements in the exchange rate, pump prices have not reduced proportionately.
“In 2025, petrol was around K30 per litre when the dollar was at K30. Today, the exchange rate is around K18 to the dollar, yet fuel is still about K26 per litre.”
“So clearly, it is cheaper for us to buy fuel now and yet we are not passing on this cheaper cost to the private sector.
Because really, the price of fuel now should be around K1 a liter, and not K26 which it is today,” Mr. Dodia stressed.
He cautioned that that if energy costs remain elevated, more companies may shift from manufacturing to importing finished goods, further weakening domestic production.
Drawing lessons from the past, Mr. Dodia recalled the decline of manufacturing activity on the Copperbelt in the 1980s, particularly in Ndola, which was once a major industrial hub.
He cited Gamma Pharmaceuticals as a typical example of a firm that shut down local production after it became cheaper to import medicines from India than to manufacture them domestically.
“Many factories closed because it became too expensive to produce in Zambia. So really, we need to learn the lesson from our past mistakes,
and look at how we can ensure that our industries can survive.”
“Clearly, they will not survive with high energy costs. So to me, that is the biggest issue that we need to deal with,” Mr. Dodia urged.
