The Confederation of Mozambican Business Associations (CTA) has protested against a new government regulation which imposes restrictions on the import of rice and wheat. Under the regulations, only the Mozambique Grain Institute (ICM) is authorised to import rice and wheat. According to the government, this measure is intended to block the illegal export of foreign exchange, to guarantee market supply of these grains, and to stabilise domestic prices.
Importers claim that the measure will damage their business. Cited in Wednesday’s issue of the independent newssheet “Mediafax”, they claim that, while they recognise the importance of stimulating national grain production, banning the import of essential raw materials (such as wheat and rice) under current conditions could seriously damage the competitiveness of national industries, raise the costs of production and hence raise the prices paid by consumers. They complained that the measure could isolate the Mozambican market and provoke commercial retaliation.
The CTA has set up a specialist commission which will meet with the government to explain the constraints facing the importers and seek consensual solutions to guarantee the sustainability of the companies and the food security of the country. The government measure should not have come as a surprise. For, in mid-December, the government banned the import of items deemed as non-essential, in order to avoid squandering the country’s foreign exchange reserves.
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READ:Mozambique: Government restricts non-essential imports – AIM report | See full list of 16 items inside The items concerned include bottled mineral water, pasta, portland cement, maize flour, salt and tiles. Most of these goods are easily available from local suppliers, and so do not need to be imported. The government argued said that the new restrictions will ensure the priority allocation of foreign exchange to the import of essential goods and services, and will make emerging Mozambican industries more competitive.
Restricting the import of rice and wheat is a logical corollary to this earlier decree. While Mozambique is self-sufficient in maize, that is not the case with wheat or rice. Hundreds of thousands of tonnes of these grains are imported every year.
If the state does not regulate these imports, it leaves the door open for fraudulent practices, such as over-invoicing. The government’s initial estimate is that it will need to import 500,000 tonnes of rice and 450,000 tonnes of wheat a year, at a total cost of 700 million dollars. Will the ICM handle these imports itself, or will it hire private companies? If the latter, how will it avoid the abuses that the state monopoly on grain imports is supposed to remove?
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