Food traders and regulators are at loggerheads over new prices set by the government to cushion consumers against high cost of living The Ministry of Trade and Industry recently published retail and bulk purchase prices for staple foods, among them maize, rice and Irish potatoes.
The Ministry also announced the scrapping of Value Added Tax to cut costs of essential goods. The new prices were intended to take effect immediately, but a week after the announcement, none of the new prices had been implemented in some of Kigali’s markets that Rwanda Today visited as of Wednesday this week.
Traders argue that they need to sell off their old stocks before they can adopt to the new prices. The new prices have caused confusion and frustration among consumers who expected to see a drop in the cost of essential foodstuffs.
For instance, a kilogramme of Irish potatoes, Kinigi breed, one of the most popular breeds in Kigali, sold at between Rwf 600 and Rwf700 instead of the new Rwf460 per kilogramme at Kimironko market as of April 25, while a 25kg sack of long grain rice that should sell at Rwf22,000 according to the new regulations, sold at Rwf32,000 at the market.
“I was very relieved when I saw the announcement of new prices especially on rice and maize because they are our everyday food, and they had more than doubled in price since last year. But I was disappointed when I got here and saw no changes, it is only on paper,” Goreti Mukamuhire, a consumer at Kimironko market said.
Irish potato traders have also raised concerns that the prices were cut despite farmers not seeing a drop in agriculture cost inputs since last year, meaning the higher the cost, the higher the price on the market.
The Ministry’s price regulations were intended to ease the burden of the high cost of living of families that have struggled to put food on the table.
Among the new tax reforms announced by the Cabinet, government exempted VAT on rice and maize flour for both domestic trade and imports. A move aimed at improving food security in the country, at a time food prices of staple foods have surged and were beyond reach for many vulnerable families, as food inflation continues to bite due to low food production.
“The removal of VAT on rice and maize will help lessen the inflationary pressures, rice and maize flour are some of the most consumed foods, reducing 18 per cent of VAT payable by the final consumer will significantly reduce prices of these goods which had soared,” said Musinguzi Angello, Senior Tax Manager at KPMG Rwanda.
The Rwanda Consumer’s Rights Protection Organisation (ADECOR) has called for enforcement saying that consumers bear the brunt when the market does not respond to supply-demand influences.
Damien Ndizeye, Executive Director of ADECOR said the regulators did not involve ADECOR in the decision-making, which undermines the consumer’s rights. The Minister of Trade and Industry, Dr Jean Chrisostome Ngabitsinze, defended the new regulations, stating that the ministry had held a meeting with traders, the private sector, and consumers to agree on the new prices.
The Minister said the regulations were aimed at solving the issue of middlemen who take advantage of market instabilities and hike prices.
“We held a consultative meeting with traders, importers, and farmers to agree on the new prices and make sure they were realistic for the market. There should be no excuses for traders,” said Minister Ngabitsinze.
The Minister added that while there is no certainty that food prices will decline this year, he said the government is hoping for better agricultural yields this season.
The International Monetary Fund reported in March that the rising food prices, linked to the weak agriculture performance due to unfavourable weather conditions, and strong