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Consumer body supports ban on import cars

Oct. 1, 2020 4 min read

4 min read

MASERU - Consumers might interpret government decision to impose a suspension on the issuance of import permits for used motor vehicles as immoral but the decision could save the economy, Consumer Protection Association (CPA) has said.

On September 15, an internal memo was leaked from the Ministry of Trade and Industry announcing that the minister had decided to impose a moratorium on the issuance of import permits for used motor vehicles coming from outside the Southern Africa Customs Union (SACU) region. 

The memo, which was later confirmed by the ministry, further stated that the ministry had also decided to impose a moratorium on the issuance of new trader’s licenses for motor dealers effective from Tuesday, September 15 until further notice. 

The decision, which met serious criticism on different social media platforms, came after a resolution by the government that the industry is not well regulated.

Some of the main challenges which prompted the decision include alleged corruption in the issuance of trader’s licenses as well as alleged tax invasion practices happening in the industry. That means the revenue that is being collected in from businesses goes directly into the pockets of the owners, the majority of which are foreigners, and then shipped out of the country for investment elsewhere.

That is because most of the import car dealers do not invest their monies with any of the local commercial banks. Government further suspects that the Lesotho Revenue Authority (LRA) is struggling to collect enough revenue from such businesses due to the absence of digital payments. As a result, the government decided to impose a temporary suspension of the issuance of import permits pending own investigations into the matter.

“As investigations continue into the matter, we have decided to halt operations in the industry to allow us enough time to see what is really happening without any form of interruption. “It is important, however, to mention that individually, Basotho are still allowed to buy cars from these countries. One of our main focuses is to ensure we level the playing field to ensure that Basotho can benefit through this type of business,” Minister of Trade and Industry Dr. Thabiso Molapo said last week.

The Consumer Protection Unit on the other hand has come out, saying that while consumers may see it otherwise, the decision by the government will partly benefit the country.

This, they say is because these vehicles, mostly imported from Japan and Singapore are killing a lot of people and do not have a direct benefit towards boosting the domestic economy. “There is so much illegitimacy happening in this industry. People illegally get hold of driver’s licenses just so that they can buy these cars and shortly cause accidents afterward because they are not qualified, drivers. 

“Government should come out with measures to ensure that Basotho are in a position to do these things on their own and not rely on other countries. Another problem is that these people just take our monies and go back to invest in their own countries. Comparatively, the government should look into the South African market to see how Lesotho can benefit through their second-hand car market,” Consumer Protection Association’s Nkareng Letsie said in an interview with Metro on Tuesday.

On the side of the consumers, however, Letsie admitted that it is a tough decision because import cars are cheaper and more comfortable compared to the local brands.

The only problem, according to him is that some of these cars come all the way from Japan and Singapore already not in good shape and therefore not roadworthy. That, he said has turned Lesotho into a scrapyard for these countries.

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According to the local economist, Tebello Tjapela, there is no need for Basotho to panic but all should focus on the future benefit of the government undertaking.

“It is obvious that there is a problem that the government wants to solve with this policy which is in the best interest of the economy. So if people are going to lose any money during this period, I would go with the saying that it is better to suffer temporarily as we prepare to benefit in a long run.

“For instance, they are talking of corruption and alleged tax evasion in the industry and all these things negatively affect our economy. Sometimes you find that five companies are using a single trader’s license that is where the issue of tax evasion comes in. That on its own is not good for our economy,” Tjapela said.

The LRA n the other hand has decided not to say much on the matter, citing that talks are still in progress with the ministry regarding the problem at hand and how best it can be addressed.

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