25 April 2008

Mozambique: Sugar Benefits From Zimbabwean Crisis

Maputo — The collapse of the Zimbabwean economy has proved beneficial for Mozambican sugar producers.

According to Joao Jeque, the executive director of the Mozambican Association of Sugar Producers (APAMO), the Zimbabwean crisis has had the unexpected effect of reducing the smuggling of Zimbabwean sugar over the border.

The main source of contraband sugar in Mozambique used to be Zimbabwe "but in 2007 we found that the flow of Zimbabwean contraband sugar into Mozambique was not as intense as in previous years", Jeque told AIM.

"Some sugar is entering Mozambique illegally", he said, "but not in the huge quantities of the past, because of the situation in Zimbabwe". He thought the Zimbabwean authorities were now making an effort to control the trade in sugar, in order to ensure supplies for their own domestic market.

Jeque said that in 2006 about 10,000 tonnes of sugar had entered Mozambique illegally, causing losses of about a million dollars to the Mozambican sugar industry.

The illegal sugar constitutes unfair competition, since it is sold at prices lower than those charged by the Mozambican sugar companies. In the case of Zimbabwean sugar this has been possible because unscrupulous operators were able to play on the huge difference between the official and parallel exchange rates for the Zimbabwe dollar.

"Any sugar that enters Mozambique and is sold at a low price affects the national industry", Jeque said. Zimbabwe was not the only problem - contraband sugar also entered from other neighbouring countries, including Malawi and even Tanzania.

The four sugar mills operating in Mozambique can completely saturate the domestic market, and still have a surplus to be exported to the European Union and elsewhere. The companies are continuing to expand their production capacity, and expect to be producing about half a million tonnes of sugar a year by 2012, which is more than double the current capacity of about 243,000 tonnes.

Ram/pf (324)

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