This paper simulates the real household expenditure effects of electricity price increases in Zambia. First, we find that electricity subsidies are highly regressive. Second, our partial equilibrium model simulations of the welfare effects of electricity tariff rises show that poorer households suffer larger percentage losses in real expenditures compared to wealthier households. Naturally, this leads to increases in poverty. We find that removing electricity subsidies and transferring the realised fiscal savings to social cash transfers reduces extreme poverty significantly.
The South African government has set a target of halving poverty by 2014. Using microdata from the 2005/6 Income and Expenditure Survey, this article frames government’s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio. With the poverty line as defined here, about half the South African population is classified as poor. Even so, the aggregate poverty gap is only about 3% of GDP. Projections of poverty in 2014 under various growth scenarios indicate that growth alone will be insufficient to halve poverty by then.