Zimbabwe is losing approximately US$30 million a year through the smuggling of Maq washing powder, a report by the Detergents Manufacturers Association (DMA) claims.
About US$12 million is foregone annually through tax evasion while US$18 million is externalised to purchase the product before it is smuggled through Zimbabwe’s porous borders, the association said.
“It can be calculated that the government is losing approximately US$30 million a year just through the smuggling of a single product into Zimbabwe, Maq washing powder, as US$12 million is foregone annually through evaded taxes and US$18 million is externalised out of Zimbabwe to purchase the smuggled product from South Africa,”
a recent DMA report read.
“Smuggling is, therefore, not only a significant problem for the industry and the workforce, but also for the government and the economy as a significant amount of revenue is lost due to the evasion of duties and taxes because of the smuggling.”
DMA said the smuggled Maq washing powder was cheaper than locally-manufactured products due evasion of duty and taxes.
“Interestingly, Maq washing powder is available for sale to smugglers in Musina, South Africa for just R37,50 per 2kg (US$2,63) which is significantly cheaper than the standard pricing in South Africa,” DMA said.
“This is extremely detrimental to Zimbabwean industry as often the consumer who has a restricted disposable income will purchase the cheaper smuggled alternative, at the expense of locally-manufactured products.”
“Our market intelligence indicates that the scale of the problem amounts to approximately 1 000 tonnes (and growing) of smuggled Maq washing powder per month, which corresponds to the figures mentioned in the article (one 30-tonne truck is entering the country each day, which is equivalent to 900 tonnes per month).
“This highlights the enormity of the situation facing the detergents industry and the Zimbabwean economy,” the report said.
DMA said there was need for the Southern African Development Community tariff structure to protect all products, as it currently does not protect locally-manufactured detergents.
“The manufacturer of Boom washing powder, Trade Kings Zimbabwe, alone employs approximately 400 staff and supports a further 2 000 through the upstream and downstream value chain of its operations.”
Confederation of Zimbabwe Retailers president Denford Mutashu said the rate at which washing powder was being smuggled in the country had the potential of killing the local industry.
“The law enforcement agents must arrest all shops and markets selling smuggled goods,” Mutashu said.
“The smuggled goods provide steep unfair competition within the retail and wholesale markets between formal and informal businesses.”