CDEDI held press conference Lilongwe, today March 27, 2021.
CDEDI Executive Director, Mr. Sylvester Namiwa delivered a statement calling goverment to remove the punitive tax on local cooking oil. He was accompanied by concerned small scale Malawian farmers and business individuals from Mchinji, Dowa and Lilongwe.
In summary, the concerned small-scale business representatives who sell food products that depends on cooking oil told the press that they are feeling direct impact of the 16.5% Value Added Tax (VAT) cooking oil because they are now failing to buy local cooking oil which have now become more expensive. They disclosed that they are trying to maintain prices of their food products by resorting to imported cooking oil though most of such oil is of poor quality and is smuggled into the country.
Also, concerned farmers who cultivates soybeans, a crop used as raw material for the production of cooking oil, expressed that the future of their crop looks gloomy following statements from the local manufacturers that they are not making business and will lay-off 50% of their workforce due to punitive Tax on cooking oil.
The representatives have asked government to turnback to their campaign promise of job creation and boost local industries by scraping off the 16.5% Value Added Tax (VAT) on cooking oil whose effect has led to the sky-rocketing of the price to almost 100%.
Remarks made by CDEDI Executive Director, Mr. Sylvester Namiwa
DO AWAY WITH PUNITIVE TAXES, A CALL FOR PRO-POOR POLICIES
The Centre for Democracy and Economic Development Initiatives (CDEDI) has noted with shock on how the national assembly has skirted around the more pressing issues that are biting hard on the poor, such as some punitive tax policies which the mid-year budget review session of parliament has smartly dodged.
Malawians may wish to recall that the Finance Minister Hon. Felix Mlusu, while presenting the 2020/2021 national budget, announced the introduction of 16.5% Value Added Tax (VAT) on cooking oil. CDEDI and other economic and social commentators advised government to rescind its decision, but to no avail.
Contrary to Hon. Mlusu’s assurances that government’s decision would not affect prices for cooking oil on the local market, the prices have sky-rocketed, with a price adjustment of almost 100% for all the locally manufactured oils.
As if this was not enough, the local manufacturers have warned that they will be forced to lay off almost 50% of their workforce, should the Malawi government fail to intervene on the matter, by swiftly moving in to scrap off the recently introduced VAT on cooking oil.
CDEDI, therefore, is being vindicated on its earlier warning that Malawians were sold a dummy in the name of the Tonse Alliance government, which cares less about the poor people, contrary to the alliance partners’ sugar-coated campaign promises that are hardly being fulfilled. Today, the average Malawians are failing to eat the promised decent three meals a day, simply because they cannot afford to buy cooking oil. Instead of creating the much touted 1 million jobs, there are gloomy faces of people on the streets who have either lost their jobs, or are hopelessly looking for a job.
The local cooking oil manufacturers are slowly being pushed out of the market by some business people who are smuggling low quality and hazardous cooking oil into the country, at cheaper prices, thereby putting the lives of many Malawians in danger.
The threats from the local cooking oil producers have come hot on the heels of the news about the closure of a tobacco processing firm in Lilongwe recently, thereby rendering hundreds of Malawians jobless! And to add salt to the injury, the Minister of Labour, Hon. Ken Kandodo shamelessly told Malawians that the Tonse Alliance government is unable to tell on whether or not the 1 million jobs are indeed being created. Should Malawians really expect a better Malawi anytime soon? Hon. Kandodo’s statement can easily be answered by the job losses the Tonse Alliance government is facilitating.
The scaling down of cooking oil production has affected the prices of raw materials for the commodity, such as soya beans and sunflower due low demand from the manufacturers, thereby hitting very hard on the small-scale farmers who mostly rely on these cash crops for their livelihood.
If the Tonse Alliance administration is really serious about uplifting the livelihood of poor Malawians, then let them start implementing policies that really resonate well with the local people, such as scrapping off the 16.5% VAT on cooking oil; a product that is commonly and mostly used by the local people in the villages for small scale businesses such as making mandasi, locally made cakes, kanyenya, etc. Otherwise CDEDI has left it up to all Malawians that mean well for this country, to be the best judges, especially now when they have been offered yet another opportunity to have their voices resoundingly heard this coming Tuesday, March 30, 2021 when they will be going to cast their votes during the bye-elections that are taking place in some parts of the country.