Prices of cigarettes in Rwanda have hiked in recent days, following a shortage in supply on the local market that lasted two weeks.
According to British American Tobacco (BAT), the manufacturer and suppliers of popular brands including Intore, Dunhill Switch and Dunhill Lights, the shortage was due to tax stamps.
In an email to The New Times, BAT’s Simukai Munjanganja, head of legal and external affairs (East and Central Africa), the law requires a pack of cigarettes to be affixed with tax stamp, hence BAT could not deliver the cigarettes for sale until the tax stamps were affixed.
He dismissed speculations that the shortage was a result of decreased production or hoarding of the product with a goal of fetching better prices on the market.
“The shortages in the market are neither due to decreased production nor price increase,” he said, adding, “We regret that there has been a shortage of our product occasioned by challenges in our supply chain logistics.”
In 2006, an operational restructuring exercise saw BAT Kenya take over the manufacturing of cigarettes for the region and only left BAT Rwanda to handle the distribution and marketing for the Rwanda-Burundi market.
A spot check across stores and supermarkets around the city discovered that there were no cigarettes on the shelves. And for popular hangout joints, a pack of Intore was at Rwf2,000 up from Rwf1,000, while Dunhill, if available, was going for Rwf4,000 (and sometimes Rwf6,000) up from the usual Rwf1,500.
Addressing the shortage
Munjanganja told The New Times that BAT was working closely with Rwanda Revenue Authority (RRA) and said they will have solved the issue by the end of the week. He clarified that prices of their products remain the same as they have always been.
“We have worked in partnership with RRA to resolve this issue and we expect to resume normal supply by this Saturday. We would like to assure our customers that BAT Rwanda has not changed the prices,” he said.
In an interview with The New Times, the acting Deputy Commissioner in Charge of Customs at RRA, Alex Mugire, said that his institution was not officially aware of any current tobacco shortage.
“Regarding the current shortage, it is not a customs issue in Rwanda and the East African Community. However, overall, cigarette imports have been going down over time,” he said.
Asked whether the shortage had the potential of affecting tax returns, Mugire replied that it was too early to tell.
BAT has a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange, the Nairobi Securities Exchange and the Zimbabwe Stock Exchange.