Biweight Estimate: An Instrument For Harmonizing Fuel Prices As An Antipoverty Measure In Cameroon

Abstract

This paper presents the use of the Statistical Biweight Technique (SBT) as a tool for harmonising fuel prices in an attempt to spread the cost uniformly across the nation. The present disproportional incidence of high fuel prices generally tends to have a high negative impact on farmers and rural dwellers who are largely poor, hungry, barefoot and behind the hoe. Harmonised fuel prices in Cameroon will benefit both urban and rural areas alike, and could also serve as an anti-poverty strategy in countries over-ridden by debt and challenged by the daunting task of poverty alleviation in the face of dwindling or chronically scare resources. This will simultaneously stimulate industrialization, economic growth and employment as well as narrow the widening gap of poverty between the city and the rural areas, without negative political implications for the current fuel-pricing mechanism. The assumption of the model is that if fuel prices are lower for rural residents and agricultural producers, cheaper and more food can be produced thanks to reduced inputs and transport costs. The analysis based on this technique gives a reasonable decrease in the price of fuels (petrol, diesel and kerosene) in the rural areas whereas the corresponding increase in urban areas is relatively insignificant. This technique can be applied to determine the prices of other essential commodities such as rice, wheat, flour, sugar and other food items.

Key words: Bi-weight; Harmonized value; poverty reduction; fuel prices; economic growth.