Closely knit syndicates have been importing basic products on behalf of unscrupulous businesses for resale at artificially low prices since the products would have evaded duty payment, Information gathered shows that some retail businesses have been circumventing tax by sub-contracting individuals to import basic food stuffs household electrical appliances and furnisher on their behalf.
Last week, Industry and Commerce Minister Mike Bimha said the business people had been taking advantage of the loophole that allowed individuals to import certain goods under the Open General Import Licence (OGIL), hence the recent removal of such goods from the OGIL under Statutory Instrument 64 of 2016.
He said the changes to the regulations meant that the loophole had been plugged since only small quantities enough for individual or household consumption can now be imported without a license.
Last month, Government gazetted SI 64 of 2016 that essentially removed certain goods, which are available locally, from the Open General Import Licence (OGIL). Some of the goods whose importation has been restricted without special licensing include bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits, vegetables, pizza, yoghurts, flavoured milks, dairy juice blends, ice creams, cultured milk, cheese coffee creamers (Cremora), camphor creams, white petroleum jellies, body creams, plastic pipes.
The SI also controls the importation of second hand tyres, fertilizers (Urea and Ammonium Nitrate), Compounds and blends, tile adhesive and tylon, shoe polish, synthetic hair products.
Goods categories also on the restriction list include builders-ware products like wheelbarrows (flat pan and concrete pan wheelbarrows), roofing frameworks, pillars, columns, balustrade, shutters, towers, masts, roofs and roofing framework.
Flash doors, beds, wardrobes, bedroom and dining room suites, office furniture and specified woven fabrics of cotton were also added onto the list. The restrictions follow banning of the wholesale importation of cooking oil, through a similar mechanism, two years ago.
Since then, locally manufactured cooking oil now occupies 95 percent of local supermarket shelf space, a massive jump from 15 percent in 2014, according to official statistics. Over that period, the price for the commodity also gradually came down from around US$4,20 for a two-litre bottle to range between US$2,60 and US$2,80 during the same period.
Minister Bimha said, “We had noticed that a lot of funny business was taking place with some business people who were bringing in the goods through questionable means. “In order to avoid paying duty, they were using individuals to bring them in small quantities so that they could avoid paying tax.
“As a result, the goods would be sold at a very cheap price compared to the locally manufactured goods. The local products were appearing more expensive. “So the SI seeks to address that anomaly through plugging that hole.
The Minister said Government has opened communication with all stakeholders. Cross border trader’s representatives have been calling for engagement with Government, fearing that their small businesses could be affected by the import restrictions.
“We have invited other stakeholders who feel that they were not involved in the initial engagement around SI 64,” sad Minister Bimha. “We view the SMEs, informal sector as well as cross border traders as commercial players whose business has been affected by the SI so we are engaging them with a view to enlighten them on what we are seeking to achieve.
“We want to urge them to create linkages between small business people and local manufacturing industry. For instance, instead of bringing in manufactured goods, they could import raw materials that could be used by the manufacturing industry,” he said.
Minister Bimha said Sadc Ministers of trade were also briefed on the development during a Sadc meeting of Ministers of trade Botswana last week.