Rwanda: Cigarette Prices Double Following Tax Revisions

19 October 2019

Cigarette prices have doubled following the recent tax revisions, Sunday Times can exclusively reveal.

The development follows a law published in the national gazette in September, detailing some of the imported products or products manufactured in Rwanda.

The new law stipulates a 36 percent tax levy on a retail price of a pack of 20 sticks plus an additional Rwf130 per pack.

Subsequently, the British American Tobacco (BAT); that supplies popular brands including Intore, Dunhill Switch, and Dunhill Lights, Impala and SM announced that the prices of their products would increase.

By press time, the official prices according to BAT, the company's most sought after brands had changed to Rwf1,300 for Intore and Rwf2,800 for Dunhill.

However, a spot survey done by Sunday Times at Kisimenti, one of the busiest business centers and surrounding areas, a packet of Intore was going for Rwf2,000 and Dunhill was at Rwf3,000 in some areas and Rwf4,000 in others.

Before the changes, Intore went for Rwf1,000 and Dunhill was at Rwf1,500 per packet, respectively.

Taxation push

BAT's Area Head of Corporate Affairs and Sustainability Manager; Willis Angira, confirmed the changes to Sunday Times in an exclusive interview, saying that besides the brands mentioned above, the whole company's portfolio had seen significant increases.

"Indeed, our retail prices for Dunhill and Intore have recently increased. In fact, it is true of the prices for our whole portfolio. The recent increases in price have been driven by excise revisions for the Financial Year 2019/20, as announced in the June 2019 budget speech by the Minister for Finance," he said.

Angira said that the biggest increases have been for Dunhill cigarettes with retail prices of Rwf2,800, SM at Rwf1,800 and Impala at Rwf1,300, respectively.

When Sunday Times sought to understand why the prices were different from one seller to another, Angira said that while they are committed to ensuring adequate supply and price of their products, it was expected that some vendors would set their own prices.

"It is worth noting that retailers are free to set their prices and therefore some variations in prices might be witnessed in the initial period following such price changes before settling down," he said.

Not a new issue

In April last year, prices of cigarettes doubled following a shortage in supply on the local market that lasted two weeks.

In an email interview with this reporter, the then BAT Kenya's Head of Legal and External Affairs (East and Central Africa) Simukai Munjanganja explained that the shortage was due to tax stamps.

"It (shortage) was due to delay in supply of tax stamps. The law requires a pack of cigarettes to be affixed with tax stamp, hence we could not deliver the cigarettes for sale until the tax stamps were affixed," Munjanganja said.

He further 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 prospective price increase. We regret that there has been a shortage of our product occasioned by challenges in our supply chain logistics," he said.

In 2006, an operational restructuring exercise saw BAT Kenya take over the manufacturing of the cigarettes and only left BAT Rwanda to handle the distribution and marketing for the Rwanda-Burundi area.

BAT has a primary listing on the London Stock Exchange and has a secondary listing on the Johannesburg Stock Exchange, the Nairobi Securities Exchange, and the Zimbabwe Stock Exchange.

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