By BENNIE MUNDANDO
IN THE past one month, the issue of smuggled and misclassified goods entering Zambia and alleged corrupt issuance of imports permits have been topical issues.
The two scourges have been blamed for the dwindling of the manufacturing sector which has resulted in job losses.
This week, the Daily Nation caught up with Zambia National Farmers Union (ZNFU) president Jervis Zimba and Economic Association of Zambia (EAZ) president Lubinda Haabazoka in its quest to get to the bottom of the matter.
Their revelations were shocking.
DN: Kindly give us a brief background on edible oil production in Zambia.
Mr Zimba: Years back when we used to import chickens, we did not have much soya beans in the country but the moment these imports stopped and we started producing our own chickens, farmers saw the need to grow more soya beans because the processors wanted the commodity.
Originally, we just used to get stock feed out of it, but because they were crushing, cooking oil started coming out. If you remember years back, we never used to import cooking oil and farmers used to sully soya beans, sunflower, and cotton seed but as crushers increased, we started producing more soya beans for the poultry industry and these people also started crushing to extract oil and then the cake would be exported.
DN: Where then did we go wrong as a country?
Mr Zimba: When they started crushing for cooking oil, these crushers began importing finished products under the disguise that they were importing crude palm oil. So, if they have imported a lot of cooking oil, which they do just before the marketing season starts, they buy little from farmers, leaving them with only a small market demand from those who make stock feeds.
This is why we have been saying we need to regulate this market because these people are sabotaging the growth of soya production. Every year around this time we expect somewhere around 200,000 metric tonnes, but when they have plenty of cooking oil which they imported, they crash the price for soya beans and the following year, farmers will have no appetite to grow because they have lost out.
So, if we were consistent in terms of the pricing, we could easily get a million metric tonnes right now. This year, we are going to produce around 400,000 metric tonnes and the poultry industry takes off around 240,000 metric tonnes and this means that we will not have a problem with the poultry industry.
However, the same people who are importing cheap cooking oil through misclassification will say they will need more soya beans for crushing for cooking oil but how do you think farmers will be competitive when you keep messing them up each time they produce more?
Let us look at the maize sector. Why is it that we cannot hit 10 million metric tonnes when we can? It is the same issue of price fluctuations. The moment we are going to have a process with constant prices, we will see a lot of production because farmers will have the market.
DN: Have you engaged stakeholders to try and salvage the situation, and what have been the results?
Mr Zimba: We have engaged various stakeholders, including line ministries, and we are particularly impressed with the response from the Ministry of Agriculture permanent secretary, who is new, and we hope the moment he settles down, a lot of things will change.
He is one of us and he understands the suffering of farmers.
During the last Agritech Expo, President Edgar Lungu asked why the price of soya beans has not been going up and I was categorical and explained that we have mafias in this sector who are bringing in smuggled cooking oil and he told the minister and the PS to look into the matter.
That same week, about 50 trucks were impounded by ZRA [Zambia Revenue Agency]. But if you do your Mathematics and backdate this misclassification and smuggling to about a year, how much have we lost as a country?
We now have a situation where a company brings in 90 tankers for importing edible oils yet local companies are running out of business and closing, rendering Zambians jobless.
How careless can we be? Last time we were in a meeting with some of these crushers and I told them that this season we want a better price for soya beans.
Someone had the guts to threaten that they will report me to CCPC. Report me for what?
I don’t grow soya beans but I will not sit and watch someone exploit our farmers with impunity because that is my business to speak for them. Our local manufacturers have been hit hard by the scourge and our poor Zambians are losing jobs.
No one will shut me up from talking about the wrong things they are doing because this amounts to economic sabotage.
DN: What should we do then to ensure that local industries are protected?
Mr Zimba: What we need now is to make sound policies that will enhance the diversification of the economy from mining to agriculture a reality. There are a lot of crops which Zambian farmers can grow and satisfy the local market.
We have manufacturing industries which can produce goods of better quality than what we are importing.
For example, why should we allow chain stores to be importing things like polon and other beef products from Spain when Zambeef has the capacity to feed the nation?
Meanwhile, Economic Association of Zambia (EAZ) president Lubinda Haabazoka reveals that Zambia is losing around K200 million through an influx of smuggled alcoholic beverages.
Dr Haabazoka blamed Zambia’s porous border crossing points and that that was almost the same amount the county intended to rake in from the mines through the new sales tax regime.
He notes that the consequences of rampant smuggling are not only limited to knocking local manufacturers out of business and increasing unemployment, but are also a drain on revenue collection.
“We are killing our own industries. When you look at the alcoholic beverages industry, over K200 million worth of alcohol is on the market and the Zambian government is losing the same amount because taxes are 100 percent the value of alcohol, but we are losing that.
“This figure alone is almost the amount of money that we want to raise from the mining industry through the new mine tax regime. So, when you look at cheap raw quality of products coming into the market, especially those that are smuggled into the country, they are really affecting local businesses,” Dr Haabazoka said.
He said this is because smuggled products are not subjected to any tax but are repackaged once in Zambia and offloaded on the market to compete with genuine local products which are subjected to all sorts of costs. As a result, local products are not selling.
“In fact, Zambian produced goods are not even facing competition from legally imported goods but from goods that are just smuggled into the country and being sold very cheaply.
“When goods are genuinely imported, they will be subjected to tax and other costs and when pricing them, prices are supposed to be slightly above those of Zambian products because local products are not subjected to high transportation costs.
“However, because they are smuggled into the country, the smuggled goods will be cheaper than local products,” he said.
Dr Haabazoka said there was a need to seal Zambia’s borders and encourage local manufacturers to produce for the country to maintain stable exchange rates.
“Smuggling is pushing local manufacturers, who have employed over 50,000 Zambians, out of business. We need to put in measures to ensure that we seal the borders and seal the leakages in terms of revenue generation to encourage our manufacturing industries to produce. We need to do import substitution for us to maintain stable exchange rates,” he said.
In recent months ZRA has intensified its clampdown on smuggling and misclassification which have been two of the wounds through which the country has been bleeding, losing huge amounts of money in uncollected taxes.