Are Malawi’s second-hand clothes wholesalers hoarding stock?

Barely a week after the Malawi government threatened to close the shops of second-hand wholesale traders failing to comply with the new tax exemption measures, business has tremendously slowed in the capital city of  Lilongwe with all but two shops, Nefss Worldwide and Arex Enterprises, completely empty by the morning of Saturday, July 29, 2012.

The situation is highly unusual as these wholesale shops are normally bursting with business this time of the month.  

This caused panic and violence later erupted among vendors who travelled from as far Southern Malawi and even neighbouring Zambia scrambled to buy the bales from the two shops.

The Vendors were further angered when, after hours of waiting and shoving,  one of the wholesalers, Arex, attempted to sell the remaining 300 bales to one ‘big buyer’ forcing  all vendors out of the shop.

The irate vendors hurled insults and manhandled the store attendants. It took the intervention of three Malawi  Police officers to re-establish peace, calm and business.

Monday, July 30, 2012. There were no signs of improvement as the “stock drought”, continued contrary to wholesaler’s promises over the weekend to start re-stocking on Monday for selling on Tuesday this week.

However, inside sources at the wholesales reveal that most of the Asian wholesalers have container loads of stock of second-hand clothes populary known as Kaunjika kept at their Kanengo warehouses away from the eye of the estranged vendors.

One is left to wonder whether this could be a ploy by the wholesalers to inject panic in the poor Malawian vendor and of course retaliate against government for cracking down on those traders evading different taxes.

So, have Kaunjika wholesalers conspired to hoard stock?

Well, only time will tell but all the facts seem to suggest so.

To begin with, there are a total of about 14 wholesalers that actively trade in Kaunjika at Bwalo, la Njobvu in Lilongwe some them include; Shama, Nefss Trading [1], Brothers [1], Alimik [1], Saya Investments, Alimik [2], Shateeta, Nafss worldwide, Brothers [2], Nefss [2], Arax Enterprises

On average, these stores re-stock and sell bales at least once a week, especially Saturdays, according to vendors and my personal observation. This was the trend even in the toughest of  times during the Fuel and FOREX shortages of earlier this year.

In recent weeks, government through the Ministry of Trade and industry has come down tough on Kaunjika wholesalers who were hesitating to reduce prices since the implementation of the new excise tax exemption on Kaunjika.

The crackdown has also exposed thick goo of other unscrupulous activities in the  sector like trading with expired wholesaler’s licenses in other cases traders do not even have licenses and of course VAT evasion.