Mozambique: These grocery staples remain prohibitively priced despite VAT exemption – Carta

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Mozambique: These grocery staples remain prohibitively priced despite VAT exemption – Carta

7:03 CAT | 19 Aug 2021

FILE - For illustration purposes only. in file CoM]

Despite the extension of the exemption from Value Added Tax (VAT), the prices of sugar, soap and cooking oil remain prohibitive for most Mozambicans.

‘Carta’ has been monitoring the prices of these products since the Assembly of the Republic approved the VAT exemption extension in November, 2020. What we have learned is that prices have continued to rise.

When the document was approved, cooking oil cost 115.00 meticais a litre. It now costs around 200.00 meticais, depending on the quality. For five litres of oil, consumers paid between 450.00 and 680.00 meticais, but it currently costs between 580.00 and 720.00 meticais for that amount.

Brown sugar, on the other hand, then cost 60.00 meticais per kilogram, whereas today it costs between 75.00 and 80.00 meticais. A 20 kg bag cost 1,200.00 meticais; currently, it costs between 1,300.00 and 1,350.00 meticais.

Soap, which then cost 15.00 meticais per bar, today costs between 20 to 25 meticais.

Read: Mozambique: VAT exemption on sugar, soap, oil to be extended for three years

Our report spoke with some consumers, who shared their dissatisfaction with the continuous rise in prices of these essential products.

One such is Aly, a resident of the Infulene neighbourhood, in Matola municipality, Maputo province, who rues the fact that prices have increased despite the extension of the VAT exemption.

Jossefa Ussene, a resident of the Patrice Lumumba neighbourhood, also in Matola, does not believe in market prices and says that there is price speculation. She says the National Inspectorate of Economic Activities (INAE) must intensify its activities, in order to prevent everyone from marking their own prices.

Cooking oil and soap producers indicate blame exchange rate fluctuations

Our report contacted the producers of sugar, soap and cooking oil in search of a reason for the continuous rise in prices.

The General Manager of the Maeva Group, Avanish Koja, indicated exchange rate fluctuations, the availability of foreign exchange and the change in reference prices as the main reasons behind the rise in the prices of the cooking oil and the soap produced by his company.

“You have to look at international prices, international currency, currency availability. The change in international prices implies either a fall or a rise in prices,” he said.

Cláudia Manjate, from OLAM Mozambique, one of the largest domestic processors of cooking oil, did not consent to answer our questions, claiming that it was the responsibility of the Association of Oil and Soap Producers, an organisation that ‘Carta’ found to be still in the embryonic phase of its creation.

A similar situation obtains in the sugar sector. ‘Carta’ contacted the president of the Mozambican Sugar Producers Association (APAMO), João Jeque, who referred us to the National Sugar Distributor (DNA), claiming that the entity was responsible for fixing the price of sugar. However, the DNA, when contacted, also said it did not have the competence to pronounce on the matter.

The VAT exemption on sugar, soap and cooking oil is valid until December, 2023, and aims to alleviate the social and economic impact of the Covid-19 pandemic. At the time, Minister of Economy and Finance Adriano Maleiane said that the exemption was still necessary to reduce the impact on consumer prices, strengthen national industry and adopt economic and social measures relevant to the current State of Calamity.

By Evaristo Chilingue

Source: Carta de Moçambique