Consumers will dig deeper into their pockets to afford drugs after the government slapped a 1 per cent levy on food and pharmaceutical products.
The burden of the tax is expected to be passed onto the final consumers who are already struggling with skyrocketing food and prices.
The new law dubbed regulatory services fees and charges, to be implemented by Food and Drug Authority, is expected to effect on March 31.
Traders have, however, opposed to new levy, saying it will increase operational cost of business.
“The process of registering all these products that come into the market is understandable but the charge is too high, I import up to 25 different wines and I have to pay Rwf500,000 for each, i don’t even make half of that in profits.”
“We are already paying high taxes and many other costs that come due to the fact that Rwanda is a landlocked country.
There is no logic in charging all this money unless you are pushing people out of the business,” said Mauro Pavesi, proprietor of The Wine Club.
His company imports wines consumed in high-end hotels like Marriott, Singita and Bisate.
He acknowledged the importance of products registration by FDA to weed out counterfeit products, but insisted that the levy is too high.
He noted that local companies import products from established and reputable companies whose products meet required standards.
“These certificates can serve the purpose, besides the high charges, we are losing a lot of time in bureaucracy, right now I don’t know whether I should place an order or not,” he noted.
In the new law, products will pay different registration tariffs. For instance, each imported branded product that falls in the human and veterinary medicine category will pay $1,250, while those manufactured locally will pay Rwf500,000 per product to cover the next five years.
Each imported toothpaste brand will have to pay $800, pesticides importers will pay $1,250, milk and milk products $400, liquors will pay $1,500, while food for infants and follow up formulae will pay $700.
The aggrieved importers are now calling for reversal of the requirements to pave the way for further consultation, which would cushion businesses from high operation costs.
Robert Bapfakurera, chairman of the Private Sector Federation (PSF) said the traders concerns are genuine, and should be addressed.
“The charges are too high, the bureau of standards previously charged 0.2 per cent, now FDA has come up with 1 per cent of import value, we will set up a meeting to discuss with them,” Mr Bapfakurera said.
“This is not a straight forward process, we shall sit down with them and do comparisons and present to them the impact that these charges are likely to have on the businesses and consumers,” said Bapfakurera.
Dr Charles Karangwa, acting director general of FDA said the agency came up with the rates after benchmarking with regulatory bodies in other countries like Ghana and Uganda, Tanzania.
“FDA is not here to create trouble on doing business but to facilitate it, the purpose of this registration is to protect those products from counterfeits as well as protecting the population.
The rate at which cancer is occurring is alarming, we had to do something,” Dr Karangwa said.
He said the registration will move Rwanda from a non-regulated market to a regulated one, and that this comes at a cos.
He said the money is for carrying out tests, which he noted is a costly exercise .
“We are still open to discussing with all the stakeholders, we are open to hearing their alternatives, we shall have more meetings with them about the issue,” said Dr Karangwa.
The importers say FDA had reasoned that the cost will be passed onto the producers, which they say cannot work because the producers do not care about what goes on will therefore not contribute to this.