The Ministry of Trade has decried continued informal exports of legumes which results in the country’s loss of foreign exchange.
The minister Sosten Gwengwe expressed the sentiments on Friday when he visited Afri-Oils Limited, a groundnuts processing factory at Njewa in Lilongwe, to appreciate the business operating environment and the challenges it is facing.
The factory processes about 4 000 metric tonnes (MT) of groundnuts annually and export it to South Africa, Zimbabwe, Tanzania and Kenya, among others. It also produces peanut butter.
Gwengwe said crops that have made an impact on the export market, including tea and tobacco, are traded on the formal markets.
He said: “We are discussing with the Ministry of Agriculture to consider formalising another market for cash crops.
“Up until we formalise soya or groundnuts exports or having a regulatory system, we will not make the progress we need.”
On his part, Afri-Oils Limited chief executive officer Tim de Borde said unregulated and informal exports are creating an unfair trading environment.
He noted that the groundnut industry is critical to the economy and can play a huge role to the export market if properly regulated.
Borde, however, acknowledged that aflatoxin is the major challenge affecting the groundnuts business, but said they working with farmers to enhance quality.
He said: “There is little control on how the crop is traded; hence, there is little formal market. It is challenging because those of us who are doing business formally have to contribute to the economy through taxes, yet the playing field is not levelled.
“We want government to look at ways of regulating the market so that everybody gets a fair share.”
In an interview on Friday, National Working Group on Trade Policy chairperson Frederick Changaya blamed lack of diversification and politicisation of trade policies for stifling trade activities in the country.
“This scenario most often increases informal exports of important crops such as groundnuts, which affects the generation of foreign exchange,” he said.
Figures from the Ministry of Trade show that about 400 000MT of legumes are smuggled out of the country annually, widening the country’s trade gap.
In its published August 2020 report, National Statistical Office said of May 2020, the trade balance narrowed to K91.8 billion from K109.2 billion the previous year.