High prices hurting competitiveness of Rwandan products across borders.

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Despite, open borders within the East African community that  were as a result of the regional  integration,  Rwandan products still struggle to compete with products from peer countries due to high prices.

Accordingly, some of the Rwanda products are higher in prices across the borders when compared to the products produced from there, which makes Rwanda’s products less competitive in the regional markets.

 “In a market where prices determined mainly the choice of a consumer to buy or not to buy, products with higher prices tend to stay long in the shelves,” said Evariste Mugisha, a business consultant told this website.

 This means it is hard for Rwandan products to compete across the borders, while on the other hand the products of regional peers find a profitable market in Rwanda.

In a mini survey conducted by this website in three major towns of Uganda that Include Kabale, Mbarara and Kampala, the half litre packed milk of Inyange industries was at Ugshs 2000, Ughs 200 higher than the locally packed milk of GBK dairies.

While the inyange cartoned Juice sells between Ugshs 6000 and ugshs 7000 while the local juice Splash sells at ugshs 5000 while other bottled juices are two times higher in pries compared to other juice on the local market.

This according to experts has lead to lower cross border export receipt for Rwanda against increasing import receipts.

The National Bank of Rwanda statistics indicate that Rwanda’s exports represented 23.0 percent  of  total exports in the first half of 2015 compared to 29.1 percent in the same period 2014.

Whilst, exports decreased in value by 26.8 percent to U$ 62.57 million in the first half of 2015 from U$85.51 million the same period in 2014. Imports on the other hand increased by 14 percent.

Traders say they that wholesale prices of Rwanda products are higher which makes them (traders) raise to have a profit margin.

“Their wholesale prices are higher than Ugandan products and products from Kenya, this is why you find their products are expensive,” said Saidatti Nalujja, a supermarket attendant in Kampala.

Moreover, experts say that prices of Rwandan products are mostly higher due to high costs of production within the country.

“When costs of production go high, you expect the price of a product to go up. For example, other countries like Uganda have cheaper packaging materials,” said Davis Mukiza, a business consultant.

Nevertheless, the Private Sector Federation-PSF, the country’s umbrella organization for business community says that efforts s to ensure Rwandan products are competitive is in place.

“We are working with exporters and manufactures to address challenges that lead to high costs of production,” said Gerald Mukubu, deputy Chief Executive officer in charge of Advocacy at the federation.

 The ministry of Trade and industry is working with exporters to ensure an increase in both value and volume while also removing bottlenecks within the sector while challenges of energy and packaging are being looked into by government and the private sector.

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About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

More posts by | Visit the site of Ndaka

 

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