More players in the Electricity Sector?: Why Monopolies in Essential Services Can Benefit the Masses

Understanding why certain industries are monopolized is crucial, particularly when it comes to essential services. A prime example is the Zambia Electricity Supply Corporation (ZESCO). This case highlights the importance of prioritizing the needs of the poor masses over the interests of a few well-to-do individuals.

Imagine if a private entity entered the electricity supply market and became the dominant player. In such a scenario, the poorest Zambians might struggle to access electricity. The fundamental reason is that private businesses are driven by profit motives. When production costs rise and supply decreases, these businesses often hike prices to sustain their operations.

Currently, ZESCO’s monopoly helps mitigate such issues. If the electricity supply industry were privatized, we could be facing exorbitant price increases and widespread power shortages. The need to maintain profitability would likely lead to higher costs for consumers, disproportionately affecting the poorest segments of society.

Moreover, privatization could result in significant price discrimination, where different customers are charged varying rates based on their ability to pay. This could further exacerbate inequalities and limit access to electricity for many Zambians.

Thus, in the case of essential services like electricity, maintaining a monopolistic structure can sometimes be the best way to ensure equitable access and protect the interests of the wider population.