President Peter Mutharika has been implicated once again in a cement deal as he has imported about 400 000 bags of cement worth K3.2 billion duty-free from Zambia and Zimbabwe between 2018 and 2019 with little explanation on what prompted this appetite of buying such a commodity at the expense of the local producers Golden Matonga explores.
While State House and Malawi Revenue Authority (MRA) have justified the transaction as “within the law”, private practice lawyer John-Gift Mwakhwawa has said the volume involved raises doubts on the “personal use” provision in the Presidents (Salaries and Benefits) Act and has called for an investigation.
Written correspondence between State Residences and MRA indicate that through director general of State Residences Peter Mukhito, Mutharika asked the public tax collector to facilitate clearance of the cement duty-free.
In the initial transaction in November 2018, the President bought 20 000 metric tonnes (MT) or 200 000 bags of cement worth $2 240 000 (about K1.68 billion) from PTC Zimbabwe Limited duty-free. In the second transaction in July 2019, Mutharika purchased the same quantity from Prestige Export based at Chipata in Zambia.
In a letter responding to the State Residences request dated November 28 2018, MRA deputy commissioner of technical customs and excise Abigail Kamwamba approved the transaction and advised that the cement should be allowed into the country from previously Lilongwe Port to Dedza and Mchinji.
Reads the letter in part: “We write to acknowledge receipt of the letter dated 21st November 2018 requesting duty free clearance of the above mentioned goods.
“We write to convey the Commissioner General’s approval to clear 20 000 MT cement from Zimbabwe duty-free in terms of Customs Procedures Code 418 of the Customs and Exercise (Tariffs) Order.”
MRA commissioner general Thom Gray Malata yesterday referred the issue to the institution’s head of corporate affairs Steve Kapoloma who said: “The authority is obliged to respect taxpayer’s right to confidentiality by not disclosing individual tax affairs to third parties or the public.
“Without commenting on this specific issue, kindly take note that under Customs Procedure Code 418 of the Customs and Excise Tariff, the President is allowed to import goods duty-free.”
The Presidents (Salaries and Benefits) Act allows the President “duty free importation of items for personal use”.
Presidential press secretary Mgeme Kalilani yesterday said the President was within the law, saying: “The goods were imported under the Presidents (Salaries and Benefits) Act chapter 2 sub-section 2 part 7 of the schedule. Under this law, the President is entitled to import goods for personal use duty-free.”
But Mwakhwawa questioned whether such volumes of cement could be construed as “personal use” and asked for a probe.
He said: “Duty-free status is for personal use, but these amounts raise suspicion that this cannot be personal use but perhaps for business.
“Even the personal use envisioned by the law does not include supporting business. The law might be prone to abuse and this needs to be reviewed as it could be bordering on abusing the law.”
Ironically, the President was importing the cement after launching the Buy Malawian Strategy (BMS)—a Malawi Government-spearheaded campaign supported by donors such as the UNDP—in April 2016 aimed at boosting local initiatives.
Beyond government support to local enterprises, during the launch Mutharika urged the public to support the local industries to protect jobs and save foreign exchange.
“We have dedicated this day to make a sincere promise to our dearest country by launching Buy Malawi Strategy. This is an oath of patriotism, pledged to our country. And we have no other country to be proud of except Malawi,” said the President.
“The Buy Malawi initiative is at my heart and the heart of my government. We pledge to buy Malawian because we are proud that Malawi can produce fine products and services worthy our pride and money.”
Malawi has three large-scale cement manufacturing companies, namely Lafarge Cement in Blantyre, Shayona Cement Corporation in Kasungu and Cement Products Limited in Mangochi.
According to the 2020 Malawi Annual Economic Report, Malawian companies have invested a lot in the manufacturing of cement and increased production capacity of cement from 210 500MT in 2019 to 243 075MT.
Mutharika’s predecessors have previously been questioned over use of duty-free status “for personal use” on items, mostly motor vehicles.
In 2009, former president Bakili Muluzi was taken to task by the Bingu wa Mutharika administration for allegedly abusing the provision to import about 100 motor vehicles duty-free.
Ironically, MRA also pounced on Bingu’s estate in 2013, after his death in April 2012, demanding customs duty for 41 personal vehicles while the country’s fourth president Joyce Banda had a fleet of 203 vehicles mostly bought duty free under the microscope.
At the time, several legal minds opined that the provision giving the President the privilege “to import duty free items for personal use” was open to abuse.
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