Sugar manufacturer Illovo Sugar (Malawi) Limited has admitted that its product on the local market is expensive compared to other markets in the region due to, among others, rising operational costs.
The Malawi Stock Exchange (MSE)-listed company last increased the price of sugar by eight percent in December 2014 due to the weakening of the kwacha and last week, it announced uniformity in prices for local and urban consumers.
Speaking on the sidelines of its 50th Annual General Meeting (AGM) in Blantyre on Friday, Illovo Sugar (Malawi) Limited managing director Ray de Allende attributed the increasing cost of its sugar on the market to a number of factors.
He said: “Depreciation of the kwacha has led to an increase in the operational costs; hence, this coupled with the rising inflation and interest rates has resulted in an increase in price of the commodity, making it the most expensive sugar on the local market in the whole region.”
Allende said despite the development, the company has tried to put more incentives to increase affordability of its products.
“We have nationalised sugar prices and we will also be introducing new 500 grammes packet of sugar so that all our customers can easily afford our products,” he said.
On his part, Illovo Sugar (Malawi) Limited board chairperson Gavin Dalgleish said economic conditions during the year were challenging, which resulted in a decline in operational profit.
“Continuous improvement and cost containment initiatives remained an area of focus with profit from operations declining by 18 percent to K23 billion with headline earnings declining by 28 percent,” he said.
Dalgleish said importation of cheap sugar onto the market coupled with import licence restrictions by Zimbabwean authorities also affected sales of the company.
Consumers have been complaining about high sugar prices, apparently pointing to the abuse of a dominant position in the market where Illovo is a monopoly.
Competition and Fair Trading Commission (CFTC) executive director Charlotte Malonda recently said in the absence of a detailed pricing system, they cannot comment on whether the sugar price in Malawi is fair.
Illovo Sugar (Malawi) Limited overall profit dropped by 39 percent to K13.5 billion ($25.8 million) from K18 billion ($34.5 million) last year.