Despite Malawi Government’ promise to tighten borders and enhance patrols, the situation on the ground is different as smugglers are still evading tax easily while frustrating local manufacturers.
A snap survey at Mwanza border exposed a lot of uncharted routes and some bypasses just along the border whereby cooking oil, wheat flour and fizzy drinks smuggling is rampant even during the day.
Smugglers are using all manner of transportation ranging from bicycles, motorbikes and cars to smuggle items.
One of the hardest hit industry, is the cooking oil sector, where price has gone up following the introduction of VAT.
A representative of the cooking oil industry Rajneesh Dabral, who is Agri Value Chain Limited Operations-In-Charge, said they are worried over the influx of smuggled cooking oil.
He feared the industry will downsize if government does not intervene.
“The sector is patiently awaiting respite from this situation as several representations have been made to the relevant authorities,” said Dabral.
Meanwhile, workers in some cooking oil companies are fearing for their job following the reduction of shifts.
“Previously we could do three or four shifts but now we are doing two shifts and chances are that we will be having a shift. I doubt if they (employers) can’t make profits we will obviously be fired,” said the source.
If the cooking oil industry fires workforce, then it will be a blow to the Tonse Alliance led-government after it promised to create one million jobs.
However, some quarters have questioned the government for introducing VAT on cooking oil as the commodity alongside sugar, wheat flour and salt were among fortified products which needed to be easily accessible.
Last week, Edible Cooking Oil Association of Malawi (ECOAM) announced that cooking oil manufacturing companies will start retrenching workers due to financial loss arising from government’ decision to uphold a 16.5% VAT on cooking oil and unfair competition with smuggled oil from Mozambique by the local traders.
“All member companies of cooking oil will commence retrenchment in the month of March due to 50% drop in sales. The financial losses are arising and companies cannot afford to hold on anymore as there is no hope for the demand to grow with such impurity and exposure to unfair competition with smuggled oil,” ECOAM Chairperson Jayshree Patel told the local media.