Illegal imports cost Chibuku Products Limited $6 million

Post was last updated: January 1, 2020
Salim Bagus

Local opaque beer producer, Chibuku Products Limited (CPL) Malawi said it has lost 40 percent of its market share to smuggled products from neighboring, Zambia and unregulated spirituous liquor dominating the market.

The development has resulted to a loss of over $6 million (about K4.4 billion) in the past three years.

In an interview, CPL Business Development and Corporate Affairs Manager, Gloria Zimba, said institutions entrusted with the task of protecting local products and consumers are toothless.

She said the development has resulted in a drop in taxes the company pays from K7 billion to K2.5 billion, annually.

“We have a trademark that is registered to CPL and we don’t believe that we are given sufficient protection. We have spent over $5 million (about K3.6 billion) to build the brand to where it is but we have seen that the smuggled products are riding on the back of our brands equity at no cost using the markets we have developed over the past 10 years.

“They (smugglers) are not paying excise duty which is 40 percent in Malawi and 7 percent in Zambia so why is the ministry allowing it?” Zimba wondered.

Minister of Industry Trade and Tourism, Salim Bagus, said the ministry is still working on the matter.

“What I remember is that Chibuku has been writing the Ministry until I called them for a meeting a few weeks ago. I gave the officer to go and inspect the situation and together they came back and gave me a report and you cannot do these things overnight.

“What I assured Chibuku is that we will take action. We have to engage several departments such as the police, the immigration department, Malawi Revenue Authority so that we do this operation together,” Bagus said.

Competition and Fair Trading Commission Acting Executive Director, Martha Kaukonde, acknowledged having received complaints from CPL.

Kaukonde said the commission has not taken any action as they do not fall under their regulatory jurisdiction.

“They came to us twice but on both times we have maintained our stance that we are there to promote fair competition and the issues of smuggling are not our mandate,” Kaukonde said.

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