Local traders, consumers go for smuggled goods
Local traders say they now prefer to be selling smuggled goods to sustain their businesses, observing that some locally-manufactured goods are becoming expensive.
A snap survey in Lilongwe, Blantyre and border districts of Mangochi, Ntcheu, Mulanje and Mchinji show that markets are flooded with smuggled cooking oil, wheat flour, alcoholic and non-alcoholic beverages, among others.
A trader, Nafutali Mbewe, found last week at a market in Mchinji, a border district with Zambia, justified selling smuggled goods from Zambia and Mozambique, saying they are cheap compared to those manufactured locally.
“We have no choice but to stock smuggled goods from neighbouring countries. What we want is for us to be in business.
“For example, we used to buy a 200-litre drum of cooking oil at K180 000, but now the price has drastically gone up to around K260 000. This is killing our business as our customers are no longer buying from us.”
In contrast, a 200-litre drum of smuggled cooking oil costs around K110 000; hence, traders’ preference for smuggled product and this also applies to all other smuggled goods.
The extent of smuggling recently came to the fore when Malawi Revenue Authority (MRA) in collaboration with police in Mchinji apprehended a police officer who was involved in smuggling of goods from Zambia.
The officer had mobilised people to destroy a camp belonging to MRA’s Flexible Anti-Smuggling Team (Fast).
Local manufacturers said currently, smuggling of products such as wheat flour and cooking oil is being heightened by the 16.5 percent value added tax (VAT) levied on these products.
VAT on wheat flour was introduced in 2016 while that of cooking oil was reintroduced in the current fiscal year.
In an interview, Venkatesh Rao, general manager of Bakhresa Malawi Limited, one of the wheat manufacturers, said the introduction of VAT has reduced capacity utilisation of wheat mills to below 25 percent and has also heightened smuggling the product from Mozambique and Tanzania where there is no tax.
Rajneesh Dabral, operations manager of Agri Value Chain, one of the cooking oil manufacturers, said: “Because of the VAT and smuggling, we are not selling the cooking oil as we used to because people are not buying.
“If we are not selling, it also means we cannot keep the manpower that we have.”
Consumers Association of Malawi executive director John Kapito earlier said they feel vindicated as they warned that the tax measure will result in increased price of cooking oil, smuggling and affect jobs.
