CAMA accuses government of transferring responsibility to “helpless consumers” on calls for immediate reduction of cooking oil

* Minister of Trade issues a final warning to all perpetrators that drastic action will be taken against to all traders that are not abiding by the gazetted notice

* While at the same time encouraging the public to report with immediate effect all the suppliers that have not yet reduced the prices

* What I find disturbing is the unwillingness by the Ministry of Trade to provide the right market prices—John Kapito

By Duncan Mlanjira

The Ministry of Trade & Industry, in conjunction with Competition and Fair Trading Commission (CFTC) have sent an ultimatum to edible cooking oil suppliers to reduce the high prices of the commodity following removal of 1.5% value added tax (VAT) done in February and has since been gazetted.

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In a statement, Minister Mark Katsonga-Phiri has issued a final warning to all perpetrators that drastic action will be taken against to all traders that are not abiding by the gazetted notice — while at the same time encouraging the public to report with immediate effect all the suppliers that have not yet reduced the prices for the Ministry’s action.

Katsonga-Phiri said they have observed “with concern” that since VAT was removed by government in February through the National Budget presented by Minister of Finance in Parliament and was duly gazetted, “some suppliers and retailers of across the country have still not yet followed suit to reduce prices”.

Minister Katsonga-Phiri

He emphasized that it was expected of all the suppliers to have stopped charging VAT on the commodity — thus the Minister advising consumers to report with immediate effect all the suppliers that have not yet reduced the prices to PRO Mayeso Msokera through 0999 150 618 and 0888 214 824 or to Innocent Helema on 0880 725 075.

But Consumer Association of Malawi (CAMA), which has been on a campaign asking the government to intervene following the continued price increase of cooking oil even before VAT was removed, described Katsonga-Phiri’s statement as “a joke of a press release”, saying “the Ministry should not transfer their responsibility to helpless consumers”.

“What I find disturbing is the unwillingness by the Ministry of Trade to provide the right market prices that they are asking traders and suppliers to be charging after removal of VAT,” said CAMA Executive Director, John Kapito in an interview.

John Kapito

“As a consumer organization, we have provided figures since VAT was removed on cooking oils and the Ministry has refused to used our figures or consult with us on anything regarding prices of cooking oil.

“And they (Ministry) seem to be clueless on what to do and are now begging for consumers’ sympathy on something beyond consumers control. There is something big and worrying that the Ministry is not disclosing.

“There are many things behind their curtains — why should a Ministry struggle to punish a trader who doesn’t comply with all the laws the Ministry has?

“If the cooking oil industries are still collecting VAT, why can’t the Ministry ask Malawi Revenue Authority to prosecute these traders? Otherwise, this is a joke of a press release.”

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In March, soon after VAT was abolished, CAMA demanded the cooking oil refiners to reduce prices of their commodity but the prices kept increasing on the market that prompted Kapito to pursue the matter further mid last month.

Kapito had maintained that if government and the CFTC had quickly acted to the call to investigate the behavior of edible cooking oil refining companies which they had raised some two years ago, the commodity’s current sky-high prices couldn’t have taken place.

Kapito had indicated that they requested both the Ministry of Trade & Industry and CFTC to investigate some anomalies that the cooking oil refining companies were indulging in — but neither reacted to the issues raised.

“It is sad that Government and CFTC took its time and now it is becoming completely difficult to engage and agree with these cooking oil refining companies regarding the reduction of cooking oil prices,” said the statement entitled ‘Government and Consumers Cheated by Cooking Oil Manufacturers’.

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“Government creates these Agencies like CFTC and Ministries in order to ensure that some traders or producers do not take advantage of their monopolistic positions on the market.

“Unfortunately, in Malawi institutions only work under political pressure despite using their mandates to carry out their functions and duties. It is either the Ministry of Trade and CFTC have been corrupted up to the level that they are unable to enforce their mandates.

“It is sad that the victims out of these failures by Government Agencies are ordinary consumers.”

CAMA contended that the cooking oil refiners “have cheated, lied and taken Malawians as fools worst still they have lied to Government officials that prices of cooking oil went up because of VAT and they mobilized masses and the media throughout the country to demonstrate against Government over the reintroduction of the VAT on cooking oils”.

“Government unwillingly has removed the VAT and until today the cooking oil refining companies are unwilling to reduce the prices of cooking oils.

“Surprisingly, they are now giving different reasons other than the VAT. The removal of VAT has made Government to lose a lot of revenue which would have assisted towards our already poor infrastructure in education and health sectors.”

When the cooking oil manufacturers attributed the price increase to the reintroduction of VAT last year, CAMA carried out its own survey and discovered some worrying trends in cooking oil prices on three brands of cooking oil as of February 2021 since the VAT was effected that showed:

* A 38% increase for a 5 litre bottle that was at K5,400 before VAT but it was adjusted to K7,438;

* A 2ltr bottle went up from K2,100 to K2,999 (representing an increase of 43%)

* A 1ltr bottle from K950 to K1,550 (63%) and 500mls from K520 to K790 (52%);

* For Kukoma, produced by Capital Oil Refinery Industries (CORI), 5ltr bottle increased from K5,700 to K7,735 (36%);

* A 2ltr bottle from K2,400 to K3,135 (11%);

* A 1ltr from K1,500 to K1,627 (8%) and 500mls from K620 to K858 (38%);

* Sungold 5ltr bottle increased from K6,200 to K6,999 (13%);

A 2ltr bottle from K2,700 to K2,999 (31%)

* A 1ltr from K1,450 to K1,500 (3%).

As of April, the prices skyrocketed to over K1,000 for 250mltrs; K2,500 for half litre; K3,500 for 1ltr; K7,500 for 2ltrs and K24,000 for 5ltrs.

Kapito had said the public anger followed by demonstrations over economic trends the country is undergoing, “brought so many insults on President Chakwera and his Government which could have been avoided if his Government machinery was proactive”.

“We are concerned and worried that the 16.5% VAT has now been turned as profits by the cooking oil refining companies without benefiting any consumer.

“We wonder why in Malawi the cooking oil refining companies are treated with kid gloves and how special is it about [them] that they control the whole Government machinery? Who is behind this organized mafia syndicate?

“We have seen so many companies being punished by the CFTC whenever they have failed to meet certain specific standards on trade and they have ended up paying huge fines but we wonder why this cooking oil producing sector is shielded by some Government Agencies and Ministries.

“We said it that the cooking oil refining companies are big manipulators, liars and unprofessional and Malawi has to find a way on how they can get the cooking oil sector removed from this family which has negatively affected and impacted on consumers economic welfare,” Kapito had said.

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