News 

Sunday, January 26, 2014 

Rwandans have to pay more for bread

Mouthful: An 18% VAT was imposed on wheat flour causing many bread sellers to raise their prices..


By AGNES BATETA

  KIGALI, Rwanda - The expected hike in bread prices has not been wholesale as some outlets kept prices unchanged.  

   An 18% rate was slapped on wheat flour by the government.

   “We have been paying VAT before, and have maintained the bread prices and therefore there is no need for us to increase it now,” Mike Fietzeh, the owner of La Galette Company told East African Business Week.

   La Galette is the main bread supplier.  “At la Galette a big loaf goes for Rwf1300 (nearly $2) and buns at Rwf800 (just over a $1) and our company has not changed the prices, because of VAT since we can deduct such taxes from the daily input we make,”  Fietzeh said.

   Fietzeh said that VAT should not be a problem to other bread manufacturers since they can actually claim it from their daily input, but the increase in prices on other bread ingredients.

   In the Rwanda National budget 2013/2014; VAT of 18% was levied on wheat  flour raising fear that this could lead to a sharp increase in bread prices.

   Bread is an item that is usually in high demand in Rwanda. The wheat flour is for the most part imported. 

   However some bread manufacturers or outlets like Simba Supermarket increased bread prices from Rwf900 for a sweet big loaf to Rwf950. 

   Prices for the salt variety in the big size is now selling at Rwf900 while prices for buns were raised from Rwf650 to Rwf750.

   “This is not because of the VAT put on wheat only, but because of an increase in prices of sugar, salt, yeast, cooking oil which are the main ingredients needed to produce bread,” Justine Ngarambe, the

General Manager of Simba Supermarket said.

  She said a sack of wheat flour that was sold at Rwf15,000 before is now going for Rwf17,000.  She said prices for other inputs also went up.

   “This is quite a big increase in bread s,” said one bread consumer, Beata Uwiringiyimana, a resident of Kacyiru.

   Uwiringiyimana said that they used to buy bread very cheaply at Rwf500 a pack, but because of the constant increase of prices on the items needed to produce it, this has led to price hikes.

   The increase in bread prices will therefore continue to affect bread consumption in the country.

   This may result in people taking on other options hence a call to the government by people to look into reversing the new VAT rate.

By Agnes Bateta, Sunday, January 26th, 2014