Illovo Sugar Malawi says sales of its sugar on the local market have gone down by 40 percent as a result of increased smuggling of the commodity into the country.
This comes at a time the company is reeling from lost foreign sales revenue as a result of removal of preferential sugar exports for Malawi into the European Union.
Illovo public relations officer, Ireen Phalula said there is evidence that huge quantities of sugar are entering Malawi with import licences from Mozambican, Tanzanian and Zambian.
She said the influx of the smuggled sugars has resulted into a drop in sugar sales for Illovo.
“The net effect of this for Illovo as a company, amongst other, is that sales in the current year are down by 40 percent compared to the same time last year,” said Phalula.
For example, Phalula said most of the sugar being smuggled into the country enters the country without Vitamin A fortification, which is a legal requirement for sugar on the Malawi market.
She said Malawi is also adversely affected as smuggled sugar is not subject to duty or VAT and therefore deprives the country of much needed revenue at a time the Malawi government is in desperately in need of such resources.
Phalula also said Illovo Malawi provides direct jobs to over 10,000 Malawians and that it indirectly creates even more jobs whose viability is under threat with the smuggling.
Last week, the Ministry of Industry and Trade issued a statement restricting imports of various products, including cement, cooking oil, laundry soap, liquor sachets and fresh milk. Sugar already requires import licences.
Ministry of Industry and Trade spokesperson, Wiskes Nkombezi, said the import restrictions are intended to address issues of technical regulations, check conformity with Malawi standards as well as protecting public health, especially for food items.
“This will also help us fight rampant smuggling that threatens people’s health and under-cutting for legitimate producers and importers while at the same time enabling us to deal with slippages in the collection of vital statistics,” said Nkombezi.
The effects of smuggling showed its ugly face last week when one of the local companies Mapeto DWS Limited retrenched 300 employees.