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Zambia stands to lose around $200 million in revenue after cutting fuel taxes, with the aim of protecting families and businesses from rising oil prices driven by tensions in the Middle East.
At the Spring Meetings in Washington, Finance Minister Situmbeko Musokotwane explained that the relief measures will cost the government to lose about $200 million in revenue. The country dropped excise duty and scrapped Value Added Tax (VAT) on petrol and diesel imports for three months starting April 1.
The move is to help Zambians cope with easing the pressure of higher fuel costs, which have been forced by global tensions, especially the ongoing conflict involving Iran.
The Finance Minister also warned that an energy crisis linked to the instability in the Gulf region could be the biggest risk to African economies over the next year. He added that higher fuel prices could increase inflation, production costs, and strain public finances across the continent.
“African governments must also continue undertaking domestic reforms that improve resilience and strengthen the quality of public spending,” he said.
Across African governments, they are being compelled to choose between protecting citizens and maintaining already weak revenues.
The case of Zambia illustrates a broader pattern in which countries that heavily depend on fuel imports are exposed to global price shocks but have limited financial space to respond.
Musokotwane called for more support from international lenders and emphasised that external financing alone would not be enough. He urged African countries to re-examine their economic strategies by focusing on productivity, energy security, and industrial growth.
The minister noted that Africa’s declining role in sectors where it once led and had global consumers is now being filled by producers elsewhere.
“Economies that produce more, diversify more, and trade more competitively are better positioned to absorb shocks without slipping into repeated crisis,” he added.
Zambia’s action comes as several African economies are still recovering from recent currency pressures and high inflation, both worsened by global energy market volatility.
