CHEAPER CREDIT, COSTLIER FUEL

CSPR says fuel price increases could weaken the benefits of the Bank of Zambia’s MPR cut and put further pressure on households

By Francis Maingaila ♥️

Lusaka, Zambia24 — 5th October 2026 — The Civil Society for Poverty Reduction (CSPR) has welcomed the Bank of Zambia’s decision to cut the Monetary Policy Rate (MPR) from 13.25 percent to 10.75 percent but warned that higher fuel prices could weaken the benefits of cheaper credit.

CSPR Executive Director Isabel Mutembo Mukelabai said the 250-basis-point reduction was timely because inflation had fallen to 6.1 percent in September, within the Bank of Zambia’s target range of 6–8 percent.

Mukelabai said the lower MPR could gradually reduce borrowing costs and help businesses, farmers and other productive sectors access cheaper financing.

She said cheaper credit could support business expansion, employment and economic activity if it reaches productive sectors quickly.

However, Mukelabai said the benefit of cheaper credit could be weakened by the sharp increase in fuel prices, whose effects are likely to be felt immediately.

Petrol has increased from K25.29 to K31.46 per litre, while diesel has risen from K26.86 to K33.27 per litre.

Mukelabai said the increases would raise operating costs for transporters, farmers, manufacturers and traders.

She warned that businesses facing higher fuel and transport costs could pass the increases on to consumers through higher prices for food and other goods and services.

Mukelabai said the fuel-price adjustment followed higher international petroleum prices, depreciation of the Kwacha and the reinstatement of excise duty after the April-to-September tax-relief period.

She said the situation presented a challenge because the MPR cut would reduce borrowing costs over time, while higher fuel prices could immediately increase the cost of living.

Mukelabai said Government should therefore introduce targeted, temporary and transparent measures to protect low-income households and fuel-intensive productive sectors from the sharpest effects of the fuel-price increase.

She also urged Government to maintain fiscal discipline, protect social protection programmes and essential services, and manage domestic borrowing so that public financing does not crowd out private-sector credit.

Mukelabai said cheaper credit could help small and medium enterprises expand and create jobs, supporting the Government’s “Grow Zambia” agenda.

However, she said cheaper credit alone would not be enough to shield poor households from the immediate impact of higher fuel prices.

Mukelabai said the Bank of Zambia and Government should coordinate monetary, fiscal, energy and social-protection policies to ensure that the MPR cut supports productive livelihoods without worsening poverty.

She also called for close monitoring of credit access, fuel-price pass-through, food and transport costs, exchange-rate pressures and poverty levels.

Mukelabai said corrective action should be taken if the combined impact of the MPR cut and higher fuel prices begins to weaken household purchasing power.