The year 2020 is almost gone, but it will be remembered as a year when a lot changed. The outbreak of the Covid-19 pandemic has taken a toll on the economy, diminished people’s livelihoods and claimed lives.
From the consumption and production perspective, the virus disrupted supply chains – fuelling a steep rise in some commodity prices.
Lockdown triggers panic buying
Covid-19, the most widespread pandemic in the word in the last 100 years, prompted the government to implement a lockdown, which triggered panic buying.
Panic buying occurs when consumers purchase unusually large amounts of a product in anticipation of, or after, a disaster or perceived disaster, or in anticipation of a large price increase or product shortage.
In Rwanda, the situation was prompted by the shopping frenzy among Rwandans after the government imposed a countrywide lockdown on March 21, 2020, in an effort to curb the spread of Covid-19.
In an effort to reign in consumers, the Ministry of Trade and Industry set a limit on the quantities of food that a buyer should not exceed. This helped to prevent people from accumulating large stocks of food.
The food rationing was implemented along with tariffs on different commodities in order to prevent traders from hiking prices.
For instance, a 25-kilogramme-bag of Tanzanian rice which used to buy Rwf25,000 (at wholesale price) was priced at Rwf31,000 immediately after the lockdown was imposed.
The Ministry said in a statement that a person should not buy more than five kilogrammes of rice, three kilogrammes of beans, eight kilogrammes of maize flour, and 10 kilogrammes of green banana per day.
For potatoes, a consumer was allowed not to purchase more than five kilogrammes, 10 for cassava flour, five litres of cooking oil and three kilogrammes of sugar.
Speaking to The New Times, Damien Ndizeye, the Executive Secretary of Rwanda Consumers’ Rights Protection Organisation (ADECOR), said that although the government set prices, they were not applicable to vegetables and fruit vendors.
This was the issue mainly given that the prices of vegetables and fruits have not been harmonised in the country thus far. They are either dictated by the traders or just determined by the market forces – supply and demand.
Overall, he said, traders and middlemen are the ones who, as usual, were getting excess profits from the commodity sales at the expense of the farmers.
"Farmers invest more to produce food, but they earn little from their investments. Yet, traders and middlemen sell the produce at higher prices. As a result, the end consumers are also charged higher prices, yet they (some) have a small income,” he said.
He proposed that the retail supply chain for food should be streamlined whereby the harvest is taken from the producer to the buyers in an efficient manner.
Overall, prices of goods and services increased by 11.5%
Between July 2019 and July 2020, Rwanda’s inflation increased by 11.5 per cent, according to the National Institute of Statistics of Rwanda (NISR).
This, according to NISR, means that for an item which was costing Rwf500 in July 2019, the price rose to Rwf557.5 in July 2020.
Talking about the causes, NISR said the rise in inflation was partly occasioned by the rise in foodstuffs.
NISR explained that there was low production for commodities such as bean in the first agriculture season (Season A) of 2020 due to heavy rain, and flooding of some marshlands for rice plantations.
This situation, it said, caused the shortage of such commodities on the market as shown by the increase of 17 per cent in prices of food and non-alcoholic beverages.
In the transport sector, NISR indicated that in the framework of stopping the spread of Covid-19, the number of passengers in buses was reduced.
It is in that regard that Rwanda Utilities Regulatory Authority (RURA) instructed all public transport buses to halve their capacity.
The statistics institute said that for the sustainability of this important service, the bus transport fare was increased by 22.6 per cent in transport tariffs, overall.
Jean-Paul Munyakazi, a farmer, and Legal Representative of Imbaraga Farmers’ organization told The New Times that heavy rains that poured from November 2019 to January 2020 was among the factors that resulted in the drop in potato and bean production.
Another factor was the disruption in the supply of potato produce from neighbouring countries.
"In general, potato production reduced by a third while the output for beans dropped by half as a result of heavy rains,” he said.
That issue, he said, contributed to the increase in prices of the two commodities, citing beans whose price increased from Rwf400 in 2014 to between Rwf850 and Rwf1,000, a record high. For the prices of potatoes, he said, a kilogramme of Kinigi variety – the commonly sought after variety in the country – increased from Rwf200 to Rwf450.
Hike in the price of fruits, including lemon
In 2020, a kilogramme of lemon (fruit) cost Rwf2,0000 at Kimironko Market, a major grocery shopping place in Gasabo District, Kigali. The price represents 100 per cent increase compared to Rwf1,000 it used to cost during a lean period.
Mango price more than doubled from Rwf1,000 to Rwf2,500 a kilogramme, according to fruit dealers.
At the same market, a kilogramme of mandarin (citrus fruit), saw its cost jump from Rwf1,500 to Rwf2,500, a more than half rise.
Factors that drove up such price include the shortage of supply compounded with disrupted trade with Burundi which constrained import of such fruits into Rwanda, according to information from the Rwanda Agriculture Board (RAB).
Normally, a kilogramme of lemon used to cost Rwf500 during harvest season and the highest price was Rwf1,000 (when the harvest season was over), according to fruit dealers.
Commenting on lemon prices, fruit dealers concurred that around March, 2020, when Covid-19 started spreading in different countries, there was a claim that lemon intake can boost immunity against the novel coronavirus disease 2019.
This situation, they said, contributed to the rise in the cost of the fruit.
"That time, lemon cost Rwf2,000 a kilogramme at retail price as demand for it increased. People bought it in large quantities such that even those who had little means purchased five to 10 kilogrammes as they felt it could protect them from Covid-19,” the trader who preferred anonymity, told The New Times.