Traders want duty-free status threshold revised

Cross-border traders have called for a review of some policy measures meant to boost the growth of small scale businesses in the country to reflect the current economic environment.

Among other issues, the traders want the Common Market for East and Southern Africa (Comesa) simplified trade regime (STR) threshold, currently at $3 000 (about K3.1 million), revised upwards.

Comesa STR is a trade arrangement which allows cross-border traders in the Comesa region to enjoy duty-free status when they import goods originating from other member States.

In an interview on Wednesday, Cross-border Traders Association of Malawi president Steve Yohane said recent developments on the economic front have eaten into gains of such policies; hence the need for a review.

“While we commend government for available policies that are meant to boost the growth of small business, the fact of the matter is that most have become outdated with the recent economic developments, specifically the devaluation of the kwacha.

“Under the STR, for instance, we are allowed to import goods worth $3 000 duty-free, but these are now a handful. A review of this would help us because as it is, it is actually other countries which are benefiting from our weak kwacha, not us,” he said.

According to Yohane, reviewing policy regulations and introducing policies that are friendly, would help cross-border traders to diversify economic activities and contribute to economic development

He said: “If government reviews measures such as these, issues of smuggling would be minimised because most traders indulge in such because of the low income realised from our businesses.”

Speaking separately, Chamber for Small Scale Business Association executive secretary James Chiutsi also observed that the devaluation of the kwacha has eaten into their gains.

“Our members who are into export businesses have been heavily affected by the recent economic developments. Buying goods from outside the country has become expensive. We, thus, ask government to continue considering SMEs in order to help them grow,” he said. 

Ministry of Trade spokesperson Mayeso Msokera was yet to respond a questionnaire, but he is on record as saying government will strive to create conducive environment for cross-border traders.

Msokera said cross-border traders remain critical to the economy of Malawi because they are contributing between 30 and 40 percent of economic operations in the country.

Cross-border trade has been a major feature of Malawi’s economic and social landscape, with available data indicating that it plays a huge role in Africa.

In the Southern Africa Development Community, for example, cross-border trade is estimated to be worth $17.6 billion per year, approximately 30 to 40 percent of total regional trade.

Nonetheless cross-border traders benefit only marginally due to a number of factors, including policy, institutional, cultural, economic, and regulatory issues.