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Smuggling: Malawi’s self-inflicted shot

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FROM MOZAMBIQUE TO MALAWI—A cyclist takes smuggled goods to his shop in Malawi

Vengeance plays out in one way in the mind of 39-year-old Paul Sauzande Martin, who operates as a cross-border trader between Mchinji in Malawi and Chipata in Zambia.

He is so self-reliant that he does not depend on anyone to transport goods from Zambia to Malawi.

“I use my motorcycle to ferry goods from Zambia to Malawi, where I run two hawkers. I usually bring to Malawi goods such as wrappers (zitenje) and fizzy drinks because they are on high demand in Mchinji District. The advantage with goods from Zambia is that they are cheap, since transporters and traders often use uncharted routes to bring the goods into Malawi. In my view, many people bring goods into Malawi without paying tax because they believe that taxpayers’ money goes into politicians’ pockets.

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“If you visit healthcare service delivery centres here in Mchinji, you will find that most health centres in hard-to-reach areas do not have medical drugs. They also have few healthcare workers because policymakers do not care about those in rural areas. As such, people do not care whether they pay tax or not; it is their way of avenging for poor public service delivery in Malawi,” he says.

That is how small-scale traders, whose real name is smugglers, like Martin passively avenge for poor service delivery.

Sometimes, however, things get physical.

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On February 6 this year, for example, smugglers raided a Malawi Revenue Authority (MRA) office at Ludzi Trading Centre in Mchinji District. They were high on the ‘drug’ called anger because officials from the tax-collecting body had bust their syndicate.

Mchinji Police Station Officer Charles Mpezeni says all hell broke loose after one driver, who is suspected to have smuggled goods into the country using a minibus, was being chased by MRA officials.

“Unfortunately, his car overturned and he died on the spot. After the driver was buried, his fellow smugglers organised themselves and destroyed a tent that was being used by MRA officials at Ludzi, causing commotion in the process. We, as police, restored order and MRA officials are back to the premises and are freely doing their job,” Mpezeni says.

This is how goods smugglers choke MRA’s work, a development that has a negative impact on public service delivery.

In fact, this is happening at a time local manufacturers of goods such as wheat flour, fizzy drinks and cooking oil have complained that the smuggling of such products from Zambia and Mozambique costs jobs in Malawi.

ETG Parrogate Cotton Limited Senior Operations Manager, Rajneesh Dabral, bemoans the influx of smuggled goods among others, into Malawi.

“This illegal influx will lead local manufacturers losing out on sales as it’s really a daunting task to stop this smuggling as we have porous borders with Mozambique, Tanzania and Zambia. This illegally brought edible oil often has quality issues which even the Malawi Bureau of Standards (MBS) officials have recognised. This defeats the MBS drive to avail consumers of quality and certified products. “There has already been a significant drop in sales of local products and it’s going to have a negative impact on the oil industry in the country. In the past, when the government scrapped VAT from essential products such as cooking oil, it greatly relieved the general masses and almost capped the illegal flow of oil from Mozambique, Zambia, Tanzania and elsewhere but this is no longer the case,” Dabral says.

True to his words, when we visited Mchinji District’s borderline with Zambia on Saturday, we found people on motorcycles and bicycles smuggling goods such as wrappers and fizzy drinks into Malawi using uncharted routes.

When we visited Mchinji Border, we also found hordes of transporters and traders bringing wrappers and fizzy drinks to Malawi.

One of them, one of the few women we found at the border, told The Daily Times that “wrappers and fizzy drinks from Zambia sell like hot cakes because they are cheap” and easy to find.

“It is expensive to buy wrappers in Lilongwe or Blantyre because of fuel and other costs. As for other products, notably cooking oil and wheat flour, we do not even bother to buy from Malawi’s cities because the products are more expensive than those from neighbouring countries due to high taxes one pays,” says the 35-year-old mother of two who identified herself as Ruth.

While wrappers and fizzy drinks sell like hot cakes in Mchinji District, we found, through snap surveys, that cooking oil, wheat flower and fizzy drinks are the products that attract good sales in Ntcheu, Mulanje and Dedza districts.

At Songwe Border in Karonga, wrappers and shoes are the most sought after products from Tanzania.

In these districts, smugglers use bicycles, motorcycles ad minibuses to transport their goods from Zambia, Mozambique and Tanzania.

Recently, it has emerged that Blantyre is becoming the hub of smuggled goods, resulting in cooking oil manufacturing companies suffering a battering.

In the commercial city, smuggled goods have ready markets in markets in Chileka, Limbe, Bangwe, Mbayani, Chirimba, Chilomoni and Ndirande townships.

“We find it hard to, for example, order cooking oil and wheat from wholesale traders in Limbe and Blantyre Central Business District because they are expensive. We would rather order from Mozambique to make profits. The introduction of 16.5 percent Value Added Tax on cooking oil and other products has made life difficult for both us, small-scale traders, and manufacturers,” he said.

Malawians’ propensity for smuggled goods, it seems, is eating into the fabric of the national economy, which depends on taxes and trade to be at par with those of neighbouring countries.

Of course, people and goods have always moved among countries in this part of Africa.

It is a fact that, for decades, Malawian citizens travelled to such countries as Zimbabwe and South Africa to work in mines. Others even travelled to Botswana, Swaziland, Zambia, among other countries. This was made possible through inter-governmental agreements.

There is no formal agreement, however, that citizens of Malawi, Zambia, Mozambique and Tanzania should be smuggling goods into each other’s territory.

That is why the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) suggested, in September 2018, that smugglers be subjected to stiffer punishment.

MCCCI Director of Business Environment and Advocacy Madalitso Kazembe is on record to have said the chamber had established that local manufacturing industries were significantly affected by goods smuggling in the country.

“Private sector involvement in the fight against smuggling can be effective as they are the ones that are being affected more. Smuggling can only end if its cost, including the cost of being caught, is higher than the revenue derived from the sale of the smuggled goods. Putting in place stiff penalties and addressing the issues of corruption at the border points will therefore assist in protecting the local industry from unfair competition it faces due to the smuggled products.

“It is therefore high time the government and the private sector worked hand in hand in addressing the issue as the current mechanisms have failed to yield satisfactory results,” she adds.

Even MRA officials are not impressed with the extent to which people can go to smuggle goods into the country and choke local industry players, most of whom are still in the morning of their activities.

MRA describes smuggling as “the illegal importation or exportation or loading onto or unloading from a conveyance; a diversion for consumption of goods subject to customs control with the intention to defraud the government of duty payable or evade any provision of the Customs and Excise Act. If people engage in smuggling, the government will not collect enough revenue to fulfil its development projects. These include construction of roads, bridges, schools, hospitals and the provision of essential services such as security and justice, among others.

“In addition, smuggling distracts MRA from focusing on revenue collection. This is because a lot of resources are diverted towards dealing with the problem instead of collecting revenue. Smuggled goods, which most of the time are restricted or prohibited, pose health risks and could be detrimental to the social wellbeing of Malawians.

“Smuggling or conveying smuggled goods is a criminal offense. When caught, you will be punished in accordance with the Customs and Excise Act. Please, note that, following the presentation of the new tax measures during the recent budget sitting, the law was revised in that anybody caught smuggling will have their goods seized. Furthermore, he or she will be liable to a fine of not less than K100,000 or three times the value of the goods in respect of the offense which was committed, whichever is greater, and not more than 10 times the amount of the duty or imprisoned for three years,” the tax-collecting body indicates on its website.

However, putting things on paper is one thing; implementing them, yet another.

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