MALAWI – Illovo Sugar Africa, Africa’s largest sugar group, has insisted that the sugar prices in Malawi remain competitive and lower than in neighboring countries.

Mid last month, the Ministry of Trade and Industry issued a statement ordering Illovo Sugar, which commands a 97 percent domestic market share, to reduce its price of industrial sugar within seven days.

The managing director of Illovo Sugar Malawi, Lekani Katandula said: Sugar remains competitive in the country. We have been in a space before where our sugar was significantly lower compared to our peers and the result was, we had run out of sugar.”

“As much as it sounds appealing to the consumer for us to reduce the price, the reality is that they can actually generate more pain as was the case last year around May and April when the prices went up due to the scarcity of the commodity.”

He was reacting to the mounting pressures from consumers and other stakeholders who feel local sugar prices are exorbitant and require import competition.

“We try to ensure that we are favorably priced compared to our peers, but that difference cannot be too big, otherwise it becomes easy for traders to buy and export the sugar to neighboring countries, in the end, we run out of sugar,” said Katandula.

He added that the company sets its prices to ensure that it can sustainably supply the product throughout the year by trying to make it less attractive for people to export or smuggle the commodity to neighboring countries.

One of Illovo Sugar’s shareholders, Lovermore Tinto backed the company on the stance, saying sugar prices in the country are fairer compared to other commodities.

“While prices of other commodities have risen significantly, prices of sugar have risen but not much.  If we compared a kilogram of sugar and maize flour, you would see that sugar is fairer, he said, adding that it is because one can afford to use a kg of sugar for a week, yet a kg of maize flour cannot last a week.

The statement comes as the Malawian government has indicated it is analyzing Illovo’s position on the reduction of sugar prices and waiting for other stakeholders’ submissions before making its determination on the matter.

The government has also issued two sugar import licences to Mugisha Investments to import 20 000 metric tonnes (MT) of brown sugar, a development Illovo Sugar has protested, saying this will affect local manufacturers.

The ministry is also looking into issuing more import licences to other players in the sugar sector to help cushion the price of commodities that use sugar as raw material if Illovo does not reduce the price of sugar.

Locally, the price of sugar is currently trading at K1 500 per kg while industries they have been buying it at $1 250 (about K1.283 million) per metric tonne.

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