Good afternoon. The Competition Regulatory Authority (ARC) has joined the ranks of those who are criticising the government’s plans to intervene in rice and wheat imports. A report from the authority, issued two weeks ago but which has just come to light, raises a wide range of problems with the plans. It questions whether they are a reasonable response to the problem identified by the government, namely tax evasion, loss of foreign currency and consequent risk of money laundering, through under- and over-invoicing. It notes that there are other possible solutions to those problems, like stricter enforcement by customs authorities. It points out that the measure could (read: will) raise costs and reduce efficiency, and notes the potential for the state to abuse its dominant position in the market. And most importantly of all, it warns that food security could be harmed as a result.
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Some of the ARC’s report has been overtaken by events. Following the universally bad initial reactions to the announcement of the plan, the Cereals Institute of Mozambique (ICM), which is to be in charge of rice and wheat imports, has changed course and declared that it will not, after all, be the sole importer of rice and wheat. Traders will be able to choose their own suppliers to import rice and wheat, but those suppliers will have to be approved by the ICM.
This is an improvement on the previously announced plans, but it does not deal with all the problems. Importers will be dependent on the ICM to approve them to start importing. Every company that currently imports will face uncertainty about whether it will be allowed to continue trading. There is nothing to stop the ICM from choosing a favoured group of suppliers in exchange for bribes, whether those are bribes to the ICM itself or to ruling party Frelimo. That is essentially what was happening with pigeon pea exports, where the ICM previously sought to control who could export and in what amounts.
