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Cameroon waives import duty on 190,000 tons of rice from India to combat rising prices

Cameroon waives import duty on 190,000 tons of rice from India to combat rising prices
  • Comments   -   Friday, 23 February 2024 13:28

(Business in Cameroon) - To facilitate the import of 190,000 tons of rice from India in March and April 2024, the Cameroon Government has offered a special incentive to importers with approved quotas for this shipment. Specifically, the measure involves the exemption from a 5% import duty, as announced by the communication unit of the Ministry of Commerce. This decision was revealed following a consultation meeting held on February 21, 2024, in Yaoundé, between the Minister of Commerce, Luc Magloire Mbarga Atangana, and the concerned economic operators.

Historically, rice in Cameroon has been taxed at a reduced duty rate of 5%, instead of the standard 20%. The complete exemption on the upcoming shipment of 190,000 tons of Indian rice aims not only to ensure the availability of this staple food but also to control its price on the local market amid escalating inflation. According to the General Directorate of Taxes at the Ministry of Finance, through fiscal measures such as tax reductions or exemptions, the Cameroonian government forgoes around CFA52 billion ($12.26 million) annually to ensure a steady supply of rice at affordable prices.

However, in recent years, there has been governmental discourse on reducing or even eliminating fiscal expenditures on mass consumption products like rice, fish, and wheat. These products have led to significant revenue losses, becoming unbearable for the public treasury (nearly CFA1,000 billion in revenue losses from 2016 to 2022 for the three products). From this perspective, the government's decision to exempt 190,000 tons of Indian rice from import duty raises questions. It exacerbates state revenue losses on a product already under-taxed (5% instead of 20%), in a context where the government is striving to increase its non-oil revenues; and the exemption is applied to a specific shipment rather than all rice imports, potentially creating unfair market competition.

Market Price Competitiveness

Allowing certain importers to bring in 190,000 tons of duty-free rice makes this Indian rice more competitively priced for consumers than other rice that did not receive the same exemption. While one might argue that duty-free rice will be sold cheaper than taxed rice (leaving the choice to consumers), it seems challenging, if not impossible, for the Ministry of Commerce's price controllers to prevent duty-free rice from being sold at the price of taxed rice, aiming for higher margins throughout the distribution chain.

It's worth noting that the rice shipment benefiting from this exemption is the result of a special allowance made to Cameroon by India, which has banned the export of its non-basmati white rice and broken rice since July 21, 2023. According to Indian authorities, this ban aims to "ensure" an "adequate" supply for local consumers and "mitigate price rises on the domestic market." However, on October 18, 2023, the Indian government exceptionally granted an import quota to seven countries (Cameroon, Guinea, Côte d'Ivoire, Seychelles, Philippines, Nepal, and Malaysia) for a total shipment of over one million tons, including 190,000 for Cameroon. All African countries receiving this exemption, except for the Seychelles, are among the top 10 importers of Indian rice on the continent.

In 2022 for instance, Cameroon spent CFA147.6 billion to purchase 496,700 tons of rice from India. This is 55.8% of the total rice import by the country over the period, according to official figures reported by the National Institute of Statistics (INS).

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