The Malawi government has asked all wholesalers of second hand clothes known here as ‘Kaunjika’ to immediately slash their retail prices following the recent removal of Import exercise tax on second hand clothes warning that failure to do that would end up in the revocation of their licenses.
Kaunjika Traders, many of them women, have for years clothed the majority of Malawians with apparels from used underwear, shoes, bed sheets, suits, shirts, dresses among others apart from making a decent living themselves.
Apart from that with limited disposable incomes, Kaunjika is a darling for Malawians because of its durability unlike some clothes from the Chinese Shops.
In the 2012/2013 fiscal budget, which became effective on 8th June 2012, the Malawi government removed exercise duty on Kaunjika and other products such as biscuits, live poultry, blankets, wheat flour, furniture, suits, vegetables, cooking oil,juices, bathing soap, woven fabric and human hair among others.
However, the importers of the above named products and others under the same tariff line will only pay 16.5 percent Import Value Added Tax and 20 percent Import duty
“The Ministry of Industry and Trade would like to inform all wholesalers… that following the removal of duty…wholesalers are advised to reduce the prices of second hand clothes to local Malawians,” said the Minister John Bande in statement.
Bande does not say in the statement whether wholesalers should slash their prices by the same margin equivalent to the removed import exercise nor does he offer an alternative.
But he said the government will not hesitate to revoke licenses of those who fail to comply with this directive
But people familiar with the market economy, which Malawi embraced said the government’s gesture is inconsistent with this concept as people automatically shun those shops where prices are higher hence the proprietors will lose business.
Last week in Mzuzu during a surprise spot check the Minister ordered the closure of some shops that did not comply with this directive.