An influx of smuggled sugar – now estimated at 20 000 tons a year – is negatively affecting the local industry. This according to the country’s major producer Zambia Sugar, who called for government intervention to halt illicit imports.
“The smuggling of the commodity has created a black economy which is out of government’s tax net and the regulator’s net. This is not only hurting the domestic industry, but also results in a colossal loss of revenue for the national treasury,” said Chembe Kabandama, marketing director.
Kabandama said the increase in smuggled sugar from neighbouring countries made local products uncompetitive. Coupled with this is a rise in production costs, which includes higher electricity tariffs.
“The smugglers do not pay any tax and they can sell their product cheaply. That is a huge challenge for us because we cannot compete with them even if we cut our prices.
“This is an issue that needs urgent attention to protect the local industry, as globally sugar production is subsidised, except here,” he said.
Sugar is a protected product, requiring government to import it into Zambia.
Recently, Zambia Sugar announced a decline in its exports to the European Union (EU), after prices collapsed to a level that is not cost reflective. To make up for the decline in EU exports, the company is looking at markets in the region where prices are expected to remain above world levels. This while competition from other regional producers increases.
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