(3 minutes read)
Mozambique’s CTA considers that the current costs of raw materials for the production of sugar, cooking oil, and soaps are not being fully passed on to market prices, although prices to the final consumer are increasing.
The Association of Oil and Soap Producers (AIOPA) clarified that the VAT exemption on Sugar, Food Oil and Soaps is not having a positive effect on the price to the final consumer due to several factors. The increase in the cost of raw materials is around 371.5% for oils and 62.2% for soaps. In the same period, the market prices of these products rose by 68% and 33%, respectively, indicating that the rise in raw material costs was not fully passed on to market prices.
Without the VAT exemption, the average consumer price of oil would be MZM 146.25 against MZM 125 .00 in the market, with a clear benefit of MZM 21.25 per liter. In the soap component, the average price, without exemption, would be MZM 73.71 against the current MZM 63.00 charged, a benefit estimated at MZM 10.71.
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Asked what should be done to control the rise in the prices of these products to the consumer, the Executive Director of CTA, Eduardo Sengo, explained that there are State institutions and legal mechanisms in place in the country that allows the Government to have real control over costs. of importing raw materials, as well as monitoring the real benefits of the VAT tax exemption, either by controlling the average cost of the basic food basket, as well as the prices applied to those products that benefit from the exemption.
