The Consumers Association of Malawi (Cama) has described Illovo Sugar (Malawi) Limitedâ€™s 12 percent sugar price hike this week as abusive.
Cama executive director John Kapito told Business News on Wednesday it is worrisome that a company such as Illovo, which recently posted a 143 percent increase in profit to K9 billion (about $30 million), should increase their prices of sugar now.
He argued that the price of sugar is currently unaffordable to many and the increase will make life even harder for Malawians.
â€œTo begin with, Illovo is a monopoly protected by government from imports.
â€œThere are many institutions in Malawi that are failing to make similar profits like Illovo because government has refused to support and protect them and they are on the brink of closing. Why is Illovo given the free hand to operate as if the market is not regulated?â€ wondered Kapito.
Illovo Sugar (Malawi) Limitedâ€™s public relations officer Ireen Phalula in an e-mailed response on Wednesday attributed the hike to the rising costs of fossil fuels and electricity.
Earlier this month, Malawi Energy Regulatory Authority (Mera) announced pump price hikes for petrol, diesel and paraffin by 9.72 percent, 13.64 percent and 16.03 percent respectively, attributing it to the combined effect of the Free on Board (FOB) prices and the exchange rate of Malawi kwacha to the US dollar.
But Phalula said the sugar manufacturer reacts to price movements and exchange rates; hence, the price rise.
She further argued that in adjusting the price of sugar, Illovo carefully considers the commercial and social imperatives related to the price increase.
â€œThe objective of the company is to keep the market price of sugar as reasonable and as stable as possible and ensure constant supply to avoid any disruptions to the general public.
â€œIllovo normally adjusts its prices to keep up with inflationary trends, but the current price increase is required to adjust for the recent fuel price increase which greatly impacts the day to day operational costs of the business,â€ said Phalula.