Malawi Revenue Authority (MRA) has noted that trade agreements are having a negative impact on the country’s revenue collection. Trade agreements are good for the development of the country but have an effect on the revenue collection mostly pointing to those that allow entry of goods free of duty.

In recent years Malawi has been a signatory to a number of trade agreements with SADC and COMESA member states in order to facilitate trade within the region.

Tom Malata, Commissioner General of MRA said that phase down in tariff with South Africa has had an impact on revenue.

Adding on he said “Trade facilitation is a regional issue at the moment. Agreements of SADC and COMESA help in facilitation of border entries and reduction in tax within member states.”

He also said that after signing an agreement with South Africa, Malawi has had a good impact on its development, in a way that goods imported from South Africa come in duty free. On the contrary, the agreement has negatively impacted tax collection. In conclusion, on the part of trade, it is good trade facilitation but has a tremendous impact on revenue.

Further, he said that the revenue collection was affected by the volatility of the kwacha in the previous year. This has seen a decline in dutiable goods due to volatile exchange rates as well as increased importations of farm inputs. Henceforth, both small and medium scaled business individuals who ply their trade across borders have been affected.

“There have been unstable prices of agricultural produce at the auction floors which has seen produce such as tobacco being affected. But our opinion is that shortly when the economy is back on track, we will see traders back in their usual business.” Malata said.

The MRA Commissioner highlighted that smuggling and tax evasion are among the other major challenges affecting the tax collection body. Songwe, Mchinji, Mulange and Ntcheu are the most affected borders where smuggling of items mostly includes cigarettes, sugar, batteries, cement and cooking oil.

“Increased smuggling of these goods will have a negative impact on our economy. This might lead to closure of big companies like Illovo and Portland who are the largest employers in Malawi,” said Malata.

In conclusion, Malata said, as MRA, teams have been posted at border points that are monitoring the trends and working at their level best to curb the problem. He urges the general public especially chiefs in areas close to borders to report any suspicious activities.