Assessing Impact of Cost-Reflective Tariffs by ZESCO on Low- Income Households in Lusaka District between 2021 and 2026

Abstract

Access to affordable and reliable electricity is essential for improving livelihoods and fostering social and economic development, especially in developing countries. Electricity allows productive economic activities and supports education and healthcare delivery as well as enhances household welfare. In Zambia, electricity supply is mainly generated from hydropower, making the sector highly vulnerable to climate variability and prolonged droughts. The national utility company, ZESCO, has been grappling with several challenges that hinder the consistent delivery of electricity. These challenges include financial constraints, aging infrastructure, and the adverse impacts of climate change on hydropower generation. The specific objectives of the study were to establish the changes in ZESCO tariffs over a five-year period between year 2021 and 2026, to assess the impact of cost-reflective tariffs on the socio-economic well-being and quality of life of low-income households in Lusaka District between 2021 and 2026, and to explore strategies that can be adopted by low-income households in response to increased electricity costs. The researcher adopted a mixed approach and employed qualitative and quantitative research designs. According to the 2022 Census of Population and Housing, Kanyama Constituency had an estimated total population of approximately 525,902 people, making it the largest of the three study sites. Mandevu Constituency followed with about 467,744 residents, while Chawama Constituency had around 208,419 residents in the same census period. The sample size was approximately 384 households. In addition to the quantitative survey, 10 - 15 low-income households were purposively selected for in-depth qualitative interviews. The research comprised questionnaires and interview schedules. The questionnaires were used because they are the main means of collecting quantitative data. The questionnaires enabled quantitative data collected in a standardized manner to ensure the data is consistent and coherent for the analysis. From the findings, the study concludes that the introduction of cost-reflective tariffs led to increased financial pressure on households. The study also found that 70% of households reduced electricity usage following tariff increases. This is strong empirical evidence of price responsiveness, particularly among low-income households. The study provides important insights into how households reduce electricity usage: cooking with an electric stove (32.7%), ironing (29.3%), use of a fridge/freezer (13.0%), and lighting (7.6%). The reduction in cooking using electricity is particularly significant. This suggests a shift to alternative fuels such as charcoal or firewood, which has serious environmental and health implications. A significant proportion of households (64.5%) reported avoiding electricity use during peak hours. This suggests adaptive behaviour in response to tariff structures or cost pressures. This behaviour is consistent with findings from dynamic pricing studies (Pereira & Marques, 2023), which show that households shift usage to reduce costs. The study further indicates that over 70% of households rely on traditional biomass energy sources (charcoal and firewood), which are generally cheaper but environmentally and health-wise harmful. The logistic regression results show that borrowing money to pay electricity bills is relatively widespread, with 52.7% of households reporting this behaviour. However, the baseline (constant-only) model demonstrates no predictive power, as it classifies all households as borrowers, reflecting only the majority category rather than meaningful relationships.