In recent weeks, Industry and Trade Minister John Bande has been a busy body, moving up and down the countryâ€™s major cities closing down shops of second-hand (kaunjika) clothes and textiles traders.
His argument is simple. Traders should pass on the benefits of the removal of excise duty on kaunjika to their customers. On the other hand, some of the traders have argued that the stocks they are selling at “higher” prices were imported before the removal of excise duty.
This is a tricky assignment the honourable minister has embarked on. It reminds me of the 2010 scenario when excise duty on energy saver bulbs was removed, but consumers were yet to benefit, at least in terms of price reduction. To discourage importation and use of incandescent bulbs, government announced an increase in excise duty on the bulbs to 100 percent while removing the same on energy-saver bulbs. Sadly, however, from my observations, consumers have not benefited from the duty-waiver on energy-saver bulbs.
Here, double standards are being employed in terms of checking adherence. Again, early last month, fuel pump prices went down, but, perhaps save for some sections of the public transport system, no commodity has gone down in response. My gut feeling is that if the pump prices were adjusted upwards by almost the same margin they were reduced, many traders will hike their commodity prices, citing “rising cost of transport.”
This is why I am raising some eyebrows on the selective implementation of the ministerâ€™s “operation-compliance.”
At the same time, I am sure the minister and his team are aware that Malawi is a free market economy largely driven by individual innovation where businesses exist to make a profit. Free markets are important in that they respond quickly to consumer demands and encourage innovation to produce high quality goods and services.
In an ideal free market economy, issues of interference in commodity prices by authorities, as the minister is doing, do not exist. Market forces of demand and supply are left to influence prices.
This is some food for thought. Many consumers are getting a raw deal.