High demand to raise cost of construction materials

Wednesday August 29 2018

Quarry

The price of construction materials is likely to increase in the coming months due to the new tariffs that have been introduced on quarry operators by local districts.PHOTO | Cyril NDEGEYA 

JOHNSON KANAMUGIRE
By JOHNSON KANAMUGIRE
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The price of construction materials is likely to increase in the coming months due to increasing demand, raising the cost of housing.

This is partly attributed to new tariffs introduced on quarry operators by local districts.

Quarry operators increased costs by between Rwf10,000 and Rwf25,000 per truck ferrying building materials such as bricks, gravel, sand and stones after districts placed new user charges and fees on quarry operators last month.

For example, to source quarry materials in Rulindo and Muhanga districts — known for being the source of a wide range of construction materials used in Kigali — one has to spend Rwf3,000 levy per truck for every trip besides the Rwf5,000 tax fees per truck not exceeding five tonnes.

While the tax fees are remitted to the districts through the Rwanda Revenue Authority, other charges are handed to the collectors deployed in the quarry zones.

With quarry materials accounting for a huge portion of the building costs, users told Rwanda Today that the new charges were contributing to the high expenses for building materials and could cause the costs of putting up structures to rise sharply.

Emmanuel Musanabera, a building owner and quarry operator said due to charges on quarries together with increased cost of licenses, it costs 30 per cent more to build than it was before.

“Increasing the charges from Rwf5,000 to Rwf8,000 did not seem too high and the fees were meant to be incurred by the operators who immediately passed it down to the buyers. But, it has had serious implications when you consider that prices for services and materials like cement had already gone up,” he said.

Muhanga and Rulindo Districts are the most preferred by builders in Kigali City and its environs due to its high concentration of natural construction materials and its proximity.

Increment

According to builders, the cost of a five-tonne truck of building stones, which ranged between Rwf20,000 and Rwf23,000 three months ago went up to between Rwf30,000 to Rwf35,000 at the source adding transport and labour costs, which have also risen to Rwf25,000. This put the total cost of a truck to about Rwf68,000 including charges.

The cost of a brick increased to Rwf35 from Rwf29 last year while a truck ferrying sand cost up to Rwf50,000 from Rwf35,000 last year. Transport costs range between Rwf12,000 and Rwf15,000 depending on the distance while another amount is spent on charges.

Increased construction in July and August usually results in an increase in quarry materials to rise, but the hike in fees at the source together with a shortage of cement earlier this year have pushed up the costs.

The price hikes have also been cited as likely to put pressure on the cost of housing, which is already under scrutiny after the government recently enacted a new property law with increased housing taxes for residential properties.

District officials have the leeway to set and adjust non-tax charges, fees and fines as they wish on services they provide. However, local authorities told Rwanda Today that the fees were determined by co-operatives who carry out checks on quarry activities amid prevalent cases of illegal miners, accidents as well as sites that may be abandoned without repair.

Prosper Mulindwa, Rulindo District Mayor in charge of economic affairs said money was not meant to impact the building materials markets since operators are the ones who ought to pay out of the profits they make.

“We need to assess exactly what is happening on the ground, in my understanding the prices shouldn’t change,” he said.

Like many districts, proceeds from quarry activities in Rulindo account for over 60 per cent of the district’s total revenues.

But, there have been concerns that without environmental levy from quarry sites, operators are likely to abandon exhausted sites without rehabilitating them.

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