They were expecting to pay the usual Rwf100 for a cup of tea but to their surprise the price had risen to Rwf200. When they asked the waitress why the cost was doubled, she pointed out that the price of sugar had risen from Rwf1,000 to Rwf1,500 per kilogramme.
Indeed, there has been an increase in the prices of some products such as sugar and cooking oil, as well as vegetables and legumes including tomatoes, amaranth chilli pepper, and peas.
Innocent Bahizi, a businessman in Kimironko Market told The new Times that five liters of cooking oil were Rwf7,500 around 2020, but the price gradually increased to Rwf15,000.
The price of tomatoes went up to Rwf1,000 from Rwf600 a kilogramme in June last year in some places of Kigali. Sylvia Mukakibibi, a vegetable trader in Kigali said that a bunch of amaranth that used to cost Rwf150 but has increased to Rwf300, while French beans increased from Rwf500 per kilogramme to Rwf800.
She said that the increase in vegetable prices was partly attributed to heavy rains that caused flooding in farms and negatively affected their production.
Such surge in commodity price has one overall implication: rising the cost of living. And, it is the low-income earners who suffer the most as they find it difficult to make ends meet.
Samuel Niyirera, a casual labourer, says thag: “The rise in foodstuffs is worrying. We are struggling to cope with the rising cost of living,” he said, calling for increasing food production and lowering the costs.
According to Seth Kwizera, Executive Secretary of Economic Policy Research Network (EPRN) – a local economic policy research platform – the income of the majority of the population does not follow the price trend, indicating that employers do not raise their workers’ salaries to respond to the high increase in commodity costs.
“When commodity prices increase yet people’s incomes remain static, it destabilises their food security because they cannot afford the foods to meet their nutrition needs,” he told The New Times.
It is to note that prices of some commodities such as beans did not go up.
Some factors driving up commodity prices
Traders and consumers concur that price increase was largely prevalent in processed food items including cooking oil and sugar, which are often dominated by imports as there is a shortage of supply occasioned by the limited local production.
Béata Habyarimana, Minister of Trade and Industry said that they carried out an inspection on three commodities namely sugar, cooking oil and soap in order to understand their price increases – indicating that soap price is partly attributed to the fact that making requires cooking oil ingredients.
The Minister was on Sunday, March 6, 2022, commenting on commodity price increases during a talk show on Isango Star TV.
She said that a 50-kilogramme sack of [imported] sugar which used to cost Rwf51,000, is costing about Rwf63,000, an increase of over Rwf23 percent.
A 20-litre pack of cooking oil that was Rwf40,000, now costs over Rwf48,600, representing over 21 percent increase.
For soap, she said that a carton (containing 12 bars of soap), increased from Rwf8,000 to Rwf9,300, an increase of 16 per cent.
Talking about sugar, she said that most of the sugar consumed in the country is imported from countries including Swaziland, Malawi and Zambia, while only about 10 percent is produced locally.
Joel Uwizeye, Director of Corporate Affairs at Madhvani Group Rwanda which owns Kabuye Sugar Works – the only sugar factory in the country – told The New Times that it produces 17,000 tonnes of sugar per year, a very small production compared to the country’s annual sugar demand.
“This situation makes the local market dominated by sugar imports,” he said.
For cooking oil, Minister Habyarimana said that the country produces about 37 percent of its cooking oil demand, while the big portion is imported from countries including Egypt and [some] Asian countries.
She explained that the prices did not shoot up in the last week, rather, have been increasing steadily over the last two years as a result of the food supply chain disruption occasioned by the Covid-19 pandemic, an issue that has been there for about two years.
“The shipment cost increased from $3,500 per boat from Asia before Covid-19 to about$10,000, which means it almost tripled,” she said, explaining that there was a shortage of containers.
Commenting on some of the factors for the price hikes for those food items, Kwizera cited the Covid-19 pandemic which slowed down their production because of the restrictions imposed to curb its spread, and the disruption it caused to the supply chain globally.
Also, he said that the depreciation of the Rwanda Franc against the foreign currencies such as the US dollar, was one of the factors because it reduces its purchasing power – the quantity of commodities that a given amount of money would be used to buy.
What should be done?
Kwizera said that there is a need to increase the country’s food production for local consumption and have a surplus for the export market, underscoring that the foodstuffs should be affordable.
“We should look for ways to increase local production so as to have import substitution,” he said, adding that prices of imported products were subject to fluctuations and the country does not have control on them.
Habyarimana said that the Government was looking for ways to help factories increase oil production through facilitating access to the needed raw materials.
She warned traders who seek to exploit Rwandan residents by even hiking the locally produced commodities. By Emmanuel Ntirenganya, New Times