Consumers are set to dig deeper into their pockets as government’s intervention to reduce sugar prices are being undermined by traders who stockpile the product, causing a shortage in market and further leading to high prices.
On Friday, last week, the Ministry of Trade and Industry ordered all distributors attached to the country’s sole sugar miller, Kabuye Sugar Works, to reduce sugar prices to Rwf36,000 per bag of 50 kilograms from Rwf48,000.
Although the decision is expected to reduce retail prices to Rwf800 from Rwf1,200 per kilo, it suffered a setback, yesterday, as prices of sugar which is imported from Ugandan and Tanzania rose to Rwf54,000 per bag of 50 kg from Rwf41,000.
In a deliberate move, dealers have decided to minimise supply, which could create a shortage in the market and exacerbate prices.
“I have now bought 100 bags at Rwf50,000 and I don’t know how much I will sell per kilo. I will also have to increase on the price and the consumer has to pay the price,” a trader from Kayonza who requested anonymity said, adding that he was scared that the comments would anger his suppliers.
Although government capped the wholesale prices at Rwf36,000 per bag of 50kg, the source said distributors have decided to keep off stock, adding that they are selling the commodity at exorbitant prices on agreement that the actual price is not receipted.
The Ministry further cautioned that any trader who fails to comply with the price ceiling will be scrapped off the list of Kabuye distributors and further punished according to internal trade laws.
Alexis Manirakora, a trader in Kigali said that they have adhered to the government’s decision to cut the price of sugar to Rwf36,000.
“We are selling Kabuye sugar at Rwf36,000 but because of this shortage, people are taking advantage of selling sugar many times and this makes the price go higher,” he said, adding that sugar from Uganda and Tanzania are sold at Rwf 41,000.
The Permanent Secretary in the Ministry of Trade, Emmanuel Hategeka, emphasised that action would be taken if the government goes to the distributors and find out that they have increased the prices above the agreed ceiling.
The managing Director Kabuye Sugar Works M.S.V. Rao noted that after meeting with the ministry, they agreed to cut down factory prices to allow distributors reduce on the price.
“We have no problem with reducing on our prices and we have informed all our distributors to abide by the government’s sugar price ceiling,” he said, dispelling fears that the price cut would affect the cost of production leading to losses on the side of the company.
Sugar prices increased from Rwf20,000 early this year to averagely Rwf30,000 in June before it drastically shot up to Rwf48,000 at the end of July and steadily raising to Rwf50,000 at the close of business on Monday .
Meanwhile, the sugar retail prices in all markets and shops around Kigali remained at Rfw1,200 per kilogram yesterday. Hategeka said this would go down gradually.
He noted the government plans to import duty free to boost supplies and is also optimistic that they will reach an understanding with suppliers to cut the prices.