WHILE the Russia-Ukraine war pains the US and Europe the most, the ever hiking fuel prices in Lesotho can only show how intertwined the small Mountain Kingdom is with the rest of the world.
April 1, 2022
3 min read
Escalating fuel prices shock families
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If Americans and Europeans talk how the Futures market have fallen, at a basic level Basotho talk about how much a litre of petrol and paraffin have increased. These commodities are essential in the daily lives of many Basotho households who do not have firewood or any other material for use as a source of fuel.
Our only neighbour South Africa is more worried with a larger population and big industry that does not only supply the region with the fuel but with goods worth billions of rands.
Already battling load shedding, there are fears in the region towards the rationing of fuel by South Africa due to the Russian-Ukraine conflict.
The falling exchange rate is another cause for worry amid a standoff over the use of what currencies should be used for payments of crude oil imports.
Otherwise, news that South Africa’s president has been making moves to oil producing powerhouses about possible special deliveries to South Africa is commendable.
At home, the general mood shows Basotho are living well below the average consumer-confidence, signalling a low willingness to spend and increased caution among consumers.
The latest Monetary Policy Committee statement of the central bank highlights the slump in the consumer confidence largely driven by declines in the economic outlook and household financial position of income of the households.
Maybe it is time we stopped relying on international oil to run our lives and seriously work on renewable energy sources. The war and sweeping sanctions on Russia, the world’s second-largest exporter of oil, have upended Black Sea supplies of crude and wheat at a time when global stockpiles are already tight, driving prices higher.
We are fortunate the price of a loaf of bread is still affordable at between M10 and M12 as Ukraine and Russia ship more than a quarter of the world’s wheat, while the fighting has closed ports and halted transport.
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While affluent consumers were the first to become alarmed about Lesotho and South Africa’s economic prospects and downwardly revised the outlook for their household finances, the less affluent are making the largest adjustments to their budgets.
Either they have to cut down on food stuffs or travel to work on foot because money is a limited resource and life generally is about opportunity costs.
With the repo rate at 4.25 percent, commercial banks will simultaneously hike interest rates and possibly make further increases over the remaining period to the detriment of borrowers.
Following the 2008 world economic crisis and the COVID-19 pandemic of our time, Lesotho and its industrial powerhouse neighbour should activate energy strategies away from crude oil-based products.
Both countries are endowed with the clean wind, clear sunshine, abundant water resources and majestic mountains for renewable energy sources that should supply our people for generations to come.