E-Malt.com News article: Zambia: Zambian Breweries Group needs excise duty decreased to boost beer sales

Zambian Breweries Group proposes that beer smuggling should be addressed by harmonising the tax structure with other SADC (Southern African Development Community) countries to reach regional excise duty parity of 40 per cent, The Post communicated on January, 15.

The company’s public relations manager Nicky Shabolyo has said the pilot project on cultivation of barley has been successful with the brewery projecting to reduce by half the K35 billion annual import bill incurred on the commodity.

Giving an overview of the performance during the past year and an outlook for 2010, Shabolyo explained that the tax structure in Zambia was the highest in the SADC region.

"Anyone doing business in Zambia, who can avoid paying taxes, will see smuggling as a means to deliver huge profits and no amount of policing will completely eliminate smuggling and it will be necessary to harmonise the tax structure with other SADC countries and we believe smuggling can best be addressed by reaching a regional excise duty parity of 40 per cent (Zambia has 60 per cent),” Shabolyo said.

He said 2009 was characterised by strong beer sales volumes.

Shabolyo said beer sales were driven largely by price reductions facilitated by reductions in excise duty from 75 per cent to 60 per cent.

"However, financial performance was negatively impacted by three factors namely, depreciation of the kwacha resulting in increased cost of inputs, high cost of borrowing to implement expansion the programme and benefits of reduced excise duty were passed on to the consumer despite severe cost pressures," he said. "And Eagle Larger sales performance was negatively affected since the reduction on excise duty was not extended to the larger, however, it is showing signs of recovery and we remain optimistic about Eagle as a brand and we shall continue to support it."

He said the 200 hectares barley growing project involving selected farmers in Lusaka and Mpongwe yielded 6.3 tonnes per hectare and plans were underway to expand to 1,500 hectares to produce 8,500 tonnes.

"The aim is to make the company self-sufficient while longer term plans include the establishment of a local malting barley industry. Currently the company spends over K35 billion annually and it is expected that the import bill will reduce by half when the project is fully realised," said Shabolyo.


15 January, 2010