Malawi is facing a sugar crisis characterized by major shortages and high prices, particularly in the black market. Major supermarkets struggle to stock sugar, whereas smaller sellers are capitalizing on this scarcity with inflated prices. Illovo Sugar Malawi, the primary supplier, faces criticism for hoarding stock. The CFTC is investigating market manipulation by traders amid calls for stronger regulatory frameworks.
Malawi is currently experiencing a significant sugar shortage, accompanied by extreme price hikes that have become a seasonal issue. Consumers have reported that sugar is difficult to find in major supermarkets, where it typically retails for the controlled price of K2,600, yet it can be easily found in smaller stores and on the streets for inflated prices between K3,500 and K5,000.
Surveys conducted indicate that many Malawians are paying well above the regulated price for sugar, demonstrating a widespread scarcity in official retail spaces.
The scarcity in supermarkets is exacerbated by high demand when new stock becomes available. Vendors are reportedly buying sugar in bulk to sell at inflated prices in town areas. Moreover, six beverage manufacturers have stated they are now reliant on the black market for sugar as they struggle to acquire it through official channels.
Illovo Sugar Malawi, which is responsible for 90% of the country’s sugar production, claims to supply over 60% of its output to domestic markets. Illovo’s interim Managing Director, Kondwani Msimuko, recently assured consumers of ample sugar supply, while also noting concerns over local retailers pricing sugar above the recommended rates.
Investigations reveal that Illovo currently holds around 40% of its sugar stock in warehouses, pending government export clearance. The Competition and Fair Trading Commission (CFTC) is aware of Illovo’s request for approval to export excess sugar but has not confirmed any such arrangements. There is public skepticism regarding Illovo’s motives for seeking to export when local consumers face shortages.
The situation has revealed operations where some superstores are bulk purchasing sugar for resale on the black market or smuggling it to neighboring countries like Zambia and Zimbabwe. Sources within Illovo and border control indicate that influential companies are involved in these practices, complicating government intervention efforts.
CFTC spokesperson Innocent Helema noted the alarming rise in retail sugar prices despite no official increase from producers. Investigations are ongoing into excessive pricing and sugar hoarding. The CFTC has historically penalized sugar traders for violations of fair trading practices and has signaled that penalties will increase under the forthcoming updates to the Competition and Fair Trading Act scheduled for July 2024.
Stakeholders are questioning the effectiveness of the Ministry of Trade in regulating Illovo and the valid concerns regarding the monopolization of sugar by powerful entities.
Malawi is grappling with a severe sugar crisis marked by both unavailability in major retailers and soaring prices in the black market. Investigations reveal hoarding practices by Illovo Sugar and alleged smuggling operations contributing to the crisis. Regulatory bodies like the CFTC are investigating the situation, but consumer concerns about governance and market manipulation persist. The imminent implementation of stricter regulations may address these violations going forward.
Original Source: www.nyasatimes.com
