The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said rampant corruption at the border points is affecting competitiveness of genuine local businesses.
The chamber has said this in its submission to President Lazarus Chakwera, detailing some of the challenges affecting the country’s private sector—often touted as the engine room of the economy.
In the paper which Business News has seen, MCCCI said corruption at the border points is being fueled by government officials who are in the habit of assisting smugglers in under-declarations and under-valuation of products involving huge volumes of merchandise.
Reads the submission in part: “For instance, the wheat milling industry, which employees over 4 000 people, has lost around 90 percent of its local market to smuggled wheat flour from Mozambique.
“At least 40 to 50 percent of cigarettes on the local market are smuggled into the country. These cigarettes are cheap but of good quality and therefore affect the local manufacturers severely.”
Container loads enter Malawi disguised as second-hand clothes which attract less duty yet these loads are finished textiles.
To resolve the challenges, MCCCI says there is need for digitisation of border processes and procedures to reduce and eliminate human manipulation, increase penalties that should be higher than potential revenue from smuggled goods, revoke business licenses from repetitive offenders and strengthen enforcement of existing measures.
Smuggling is a diversion for consumption of goods subject to Customs control with the intention to defraud the Government of duty payable or evade any provision of the Customs and Excise Act.
Smuggling or conveying smuggled goods is a criminal offense where when one is caught, their goods are seized and are liable to a fine of not less than K100 000 or three times the value of the goods in respect of the offense which was committed, whichever is greater and not more than 10 times the amount of the duty or imprisoned for three years.
Recently, Malawi Revenue Authority (MRA) spokesperson Steven Kapoloma described smuggling as a serious challenge that is compromising efforts by the authority to meet its revenue targets.
Minister of Trade Sosten Gwengwe said smuggling remains the biggest problem facing local manufacturers.
He said the government is confiscating smuggled products, and warned to close down businesses and prosecute traders involved in the illegal importation of foreign products.
He said: “Each day, Malawi is losing billions of Kwacha through unpatriotic people who are bringing into this country uncertified products.
“Currently, the fiscal police, MRA, Malawi Bureau of Standards, my ministry and the private sector are engaged in joint operations to combat the menace.”