Mukheristas’ shutting up shop due to economic and political crisis in Mozambique

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Mukheristas’ shutting up shop due to economic and political crisis in Mozambique

1:43 CAT | 07 Oct 2016

Magazine Indendente / Sudekar Novela, chairman of the association of cross-border informal trade operators, known as 'Mukheristas'.

According to Sudekar Novela, president of the Mukheritas Association, the economic crisis facing the country, combined with the depreciation of the metical against foreign currencies, is causing Mozambique’s ‘mukheristas’ (informal cross-border traders) to cease trading altogether.

The mukheristas, who import many of Mozambique’s daily necessities from neighbouring South Africa to resell in the domestic market, are now asking the government to temporarily reduce or remove customs duties.

According to Novela, a large proportion of mukheristas have abandoned the business because the high price of products in South Africa means they get little or no return on their investment. This is compounded by the economic and military crisis the country finds itself in. As a result, the Mukheristas Association’s 1,500 membership roll has fallen to 30 percent of that number.

The dearth of bank financing and high interest rates are also hitting businesses hard.

“We are trying to survive but still it is not easy because of price rises in South Africa and the currency too, which leaves us overwhelmed. This is why there has been a fall in the number of people in this line of business. And banks are not lending money. Despite the understandings that some banks have with the market, there is no financing for cross-border operators,” he said.

As an example, Novela cites cooking oil. “We used to buy five litres of oil for 30 or 40 rands in South Africa, but now its 95 rands, so after transport costs and tariffs, we ended up selling it for 600MT”.

“At this time of crisis like this, no-one can afford this price. Hence the withdrawal of many from the business. With purchasing power drastically reduced, even someone who tries to survive by going to South Africa can no longer find customers to buy because they do not have the purchasing power either.”

Novela also explained that if a trader goes shopping in South Africa with 50,000 rand and comes back to Maputo and sells the goods for 47,000 to 48,000 thousand rands when he was supposed to sell them for 55,000 rand or more, he will abandon the business.

Novela warns that if those in power do not stop the war, “we are in serious trouble. It is vital to solve the war problem because only then can the economy stabilise for everyone, and only then will all those who came from the north of the country with goods start bringing them again, and will also bring merchandise from the neighbouring countries. We, who used to go to Niassa to sell and buy corn and other commodities, will start over with the business.”

“If the politicians do not take action, there will be no party during the festive season,” he warns.

The mukheristas say that in face of this situation the government should reduce or temporarily annul tariffs to facilitate the entry at least of basic necessities. It makes no sense, Novela says, to import products and try to sell them at high prices to those who lack purchasing power. “We end up sitting on stock longer than we should, and in some cases it ends up spoiling.”

The mukheristas say that the government must make a decision in this situation, because until there is the political will to end the war, the government should look at the borders and see that there is a crisis. There are people who are trying to bring products in the country to resolve the hunger situation, and the government should suspend customs duties for a certain period of time until the situation is back to normal, Novela says.

“The government could reduce custom duties or exempt operators until January 2017 while at the same time studying other ways to alleviate the suffering of the population,” he says.

Novela also exposes the existence of customs officials’ “schemes”, saying there is still no change in customs duties despite the SADC protocol of reducing or eliminating duty on imported products.

“The SDAC protocol establishes that each member country should from 2001 started reducing tariffs by 5 percent annually. At that time, Mozambique had a 52 percent tariff, so by now there should no longer be anything to pay,” he points out.

Source: Magazine Independente