Minister Bagus stops Malawi Revenue Authority  to authorize beer smuggling 

Minister of Trade, Industry and Tourism Salim Bagus has moved in to stop attempts by the country’s revenue collection body – the Malawi Revenue Authority (MRA) – to authorize smuggling of foreign beer into the country.

Bagus this morning instructed the ministry’s Principal Secretary (PS), Dr. Ken Ndala, to stop MRA from implementing the waiver, arguing it is a threat to the local industry.

“I have instructed my PS to formally write MRA about this. I was not aware of this waiver. My fear is that some individuals and the business community could abuse this waiver to their own benefit at the expense of the good of the nation’s revenue collection drive,” the minister told Nyasa Times in a phone interview Monday.

Recently, MRA announced the removal of permit requirement on imports of 20 cases or less of alcohol and non-alcoholic beverages. The authority said the measure was with immediate effect and all those concerned were required to observe and apply the new import requirement.

“The Malawi Revenue Authority is pleased to inform all importers and the business community that the government has waived import permit requirement for those importing a maximum of 20 cases or less of alcoholic and non-alcoholic beverages. The measure in with immediate effect and all those concerned are required to observe and apply the new import requirement,” reads the notice published in the local media.

But Bagus observed that the waiver is a serious threat to the growth of the local beer companies and job creation drive.

 

“It’s unfortunate that such a waiver was introduced in the first place. It is for this reason that I have instructed the PS to write MRA to stop its implementation because it would not help this country create jobs, but, instead, export jobs to other countries,” he said.

 

The waiver also came barely a few days after opaque beer producer – Chibuku Products Limited (CPL)   – had announced its plans to lay off 150 employees due to continued escalation of smuggled Chibuku beers from the neighbouring country, Zambia.

The CPL managing director, Gerald Bowler, through a letter to the Minister of Labour, Youth, Sports and Manpower Development, Martha Chanjo, the Labour Commissioner, Hlalerwayo Nyangulu, the Deputy Labour Commissioner, Wafwire Musukwa, the Regional Labour Officers – Lilongwe, Blantyre and Mzuzu, complained that the local beer business has, over the past two years, operated under severe trading strain resulting into volume loss and negative financial performance.

Bowler attributed the trade strain to continued escalation of smuggled Chibuku Super and other opaque products Zambian, and increase in illicit unregulated high alcohol by volume percentage spirit products that have flooded the Malawi market.

“With their current sales volume deficit, now running at over one million litres per month, they have been operating at less than 35 per cent of our installed production and manning capacities. Consequently, management has made a decision to right-size the business in line with its current volume demand and production manning levels.

“We believe this will deliver cost efficiency, optimized labor management, as well as sustain our profitability and future ability to continue operations,” reads the letter Bowler on behalf of his company.

But instead of putting in place stringent measures to protect the local industry from closing down thereby maintaining existing jobs, MRA decided to come up with a policy that was likely to harm the local beer brewers.

A renowned Chancellor College-based economic expert, Professor Ben Kaluwa, has questioned the rationale and motivation behind the waiver, arguing it was likely going to suffocate the local beer industry and eventually frustrating government efforts to create jobs whilst maintaining the existing ones.

Kaluwa, speaking in an interview with Nyasa Times on Monday afternoon, expressed surprise to see MRA coming up with such a waiver when the body is complaining that it is not collecting enough to finance different development projects.

The economics expert further stated that he expected MRA to develop policies that would work to the best interest of the local industry and avoid any attempts that would choke them.

“I don’t understand MRA’s motivation behind the policy. In whose interest was the waiver? Local beer producers like Chibuku Products Limited and Castel Malawi Limited have been complaining about the punitive taxes and unfavourable market. Instead of resolving these problems, it is puzzling to note that MRA is coming up with policies that are likely to suffocate the local producers who religiously pay their taxes to the Malawi Government,” he said.

Kaluwa further expressed worry and fear that government is, through the waiver, creating a fertile ground for illegal beer trade in the country.

“Above all, I don’t know what they intended to achieve because this is just the same as authorizing illegal trade in a country. I don’t also know how they intended to collect revenue from such a business. Furthermore, I don’t know how such a waiver would help the Malawi Government to create jobs for its youths,” he narrated.

MRA official, Abigail Kawamba, whose name was put in the notice as a contact person for the waiver, did not pick our call when Nyasa Times wanted to get a comment from the Authority.

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