By Avit Ndayiziga
Traders and consumers in Bujumbura, the economic city of Burundi, are swallowing a bitter pill of price hikes in everything from food to fuel as the government strives to meet its budgetary targets through heavy tax collection.
Shumi, a street hawker, relies on daily earnings to sustain his wife and two daughters. Shumi usually wakes up at 5 AM. He quickly cleanses his face and strides to Ruvumera market located in the western part of Bujumbura, the economic city of Burundi. He purchases five to ten pairs of women’s trousers that he sells on the streets around the former central market that was destroyed by fire a decade ago.
Unfortunately, this Monday morning, July 31, 2023, things didn’t work out as expected. “Today is not a good day for me,” laments Shumi while smoking a cigarette.
“When I arrived at the market this morning around 6:30, all the gates and doors were still closed. We were all stranded near the closed market gates, traders and buyers together.” He said.
“At first, I thought the janitors weren’t around to open, hoping they would open shortly. But they didn’t,” he said. Later on, Shumi continued, “Suddenly, I learned that traders were on strike, protesting against the exorbitant rental fees and heavy taxes imposed by the country’s Revenue Authority Office (OBR)”. He noted.
Promptly, the uncertainty of providing for his family submerges him as the market is closed and he can neither buy nor sell goods.
“Regrettably, this situation adversely affects small-scale sellers and street vendors like me, as we rely heavily on our daily earnings to sustain our families, I am wondering how will I be able to buy doughnuts or biscuits for my two daughters as they rush toward me for their usual evening hug and gifts when I return home.”Shumi voiced his displeasure with the strike.
When asked if he typically earns enough profit as a street hawker, he responded affirmatively. “As long as Mister Blues (a term used to refer to the police) doesn’t arrest us, we sell and make a modest profit to feed our families,” Shumi mentioned.
The mayorship of Bujumbura, Burundi’s economic capital has prohibited street hawking in the city, particularly around the former central market which was destroyed by a fire ten years ago. Street hawkers are frequently arrested and detained as the mayorship encourages them to relocate to established markets which they find costly.
How did it all start?
Since the end of 2021, there has been a significant increase in the prices of necessities such as food and fuel. Economic analysts attribute this sudden surge to various factors, including the impact of the COVID-19 pandemic and the ongoing Russian invasion of Ukraine, which have disrupted the global markets supply chains .
In 2022, traders and consumers experienced persistent inflation, which caused a huge gap between offer and demand in the market. As of the beginning of 2023, the Central Bank of Burundi (BRB) reported a global inflation rate of 28.6%, with the highest inflation rate being in the food sector at 41.5%.
Despite the severe economic conditions, the government and lawmakers of Burundi approved a new budget program for the financial year 2023-2024. The budget includes a substantial increase of 65.23% in state expenditures compared to that of the previous fiscal year. Economic experts and activists warned that this budget would have adverse effects on low-income earners and taxpayers, placing a significant burden on them.
Despite warning from Economic experts and activists, on July 1, 2023, the government of Burundi began sourcing from its newly approved program budget.
Almost a fortnight later, on July 13, 2023, prices of everything did not delay to skyrocket as economic experts and activists had predicted.
The inflation race began with the cost of administrative documents such as police clearance, which increased from BIF 1,000 to 3,000. Meanwhile, the price of car license plates surged from BIF 1,500 to 100,000 and biometrics rose from BIF 0 to 30,000.
On July 24, 2023, gasoline prices increased from BIF 3,250 to 3,985, fuel from BIF 3,450 to 3,795, and crude oil from BIF 3,150 to 3,930. Despite the fuel prices surge, fuel scarcity prevails as it has been severely hitting Burundi for over three consecutive years.
Following the surge in petrol product prices, the bus fare for commuters within Bujumbura city increased from BIF 550 to 600, while those traveling in the countryside experienced an increase of over BIF 2,000. Public transportation users were optimistic that this price adjustment would guarantee a constant supply of fuel at gas stations. However, their expectations were short-lived as cars and motobikes returned to queuing for fuel after a few weeks.
Jean Minani, a public transportation user, who was waiting at the bus central stop in Bujumbura downtown, expressed his concerns about the latest increase in fuel prices. “This would further burden families already struggling with the high cost of living. What surprises us is that neighboring countries are experiencing lower prices. The government should explore alternative solutions to address the fuel cost, given the rapid inflation within the country. However, I hope this surge will ensure a steady fuel supply at all gas stations,” Minani said.
Just three days after the increase in fuel prices, on July 27, 2023, Société sucrière du Moso (SOSUMO), the only sugar production factory in Burundi, raised its prices. The selling price of sugar per kilogram went up from BIF 2,500 to BIF 3,300. Despite the steep price hike, there still needs to be more sugar, leading consumers to line up outside shops and stores in hopes of obtaining limited quantities.
No, later than two days later, on Saturday, July 29, 2023, Luckymore Murape, the General Manager of Burundi Cement Company (BUCECO), a local cement manufacturing factory, made a press release announcing an upcoming price increase for their products starting from August 1, 2023. BUCECO 32.5R cement will now cost BIF 38,000 per 50 kg sac, an increase of BIF 9,500 per sac from the previous price of BIF 28,500 while BUCECO 42.5R cement will now cost BIF 48,000 per 50 kgs sac, an increase of BIF 14,000 per bag compared to the previous price of BIF 34,000.
As the race to inflate everything prevails, Burundi’s Revenue Authority imposed new tariffs on the shop and stand renters in Ruvumera and Jabe markets, situated in Bujumbura. Overwhelmed by new tariffs, they went on strike on July 31, 2023. They did not open the markets. The market closure negatively affected small-scale sellers and street vendors like Shumi, who rely heavily on daily earnings to sustain families.
According to Shop and Stand renters, the prices soared from BIF 110,000 to 600,000, an increase of more than 500 percent.“These rates are too high, we can’t afford them,” says Marie Rose, a trader who sells female underwear and male pants at Ruvumera market.
The traders’ strike prompted swift action from authorities. Martin Niteretse, the Minister for Internal Affairs and Public Security, emphasized that the government’s responsibility extends beyond revenue collection to facilitating trade. He acknowledged the traders’ concerns about prices and urged the OBR to review them to ensure seamless business operations.
On the other hand, the President instructed a committee to find a lasting solution within three days. In the meantime, traders resumed their businesses the next day. Shumi, who was significantly impacted by the strike, welcomed the decision and returned to the Ruvumera market to purchase trousers, despite the steep price hike. When returning home, he has bought doughnuts and biscuits for her two gorgeous daughters.
Despite a strike fueled by the price surge, the Modern Brewery of Burundi (BRARUDI) wasted no time in increasing the prices of its beverages a few hours after the traders’ strike. On August 1, 2023, the company announced new tariffs for its beverages.
The price of soft drinks, Viva Tangawizi, and Viva Apple Malt were raised from BIF 1,000 to BIF 1,500 per bottle. The price of Nyongera 72 cl was increased from BIF 1,200 to BIF 1,700 per bottle, while the price of Primus 72 cl went from BIF 1,700 to 2,200 per bottle.
The price of Primus 50 cl increased from BIF 1,200 to BIF 1,700 per bottle. The price of Amstel blonde 65 cl went from BIF 2,500 to BIF 3,000 per bottle, while the price of Amstel blonde 50 cl increased from BIF 2,100 to BIF 2,600 per bottle. The price of Amstel Bock 33 cl increased from BIF 2,100 to BIF 2,600 per bottle, and the price of Amstel royale 50 cl went from BIF 2,600 to BIF 3,100 per bottle.
Causes behind soaring prices
The companies that increased their prices have advanced similar reasons for the price surge, which include a rise in the cost of imported raw materials in the international market and a shortage of foreign currencies.
However, Pierre Nduwayo, the president of the Association burundaise des consommateurs (ABUCO), believes that the implementation of the general state budget for 2023-2024 is the root cause of the overall price increase.
“The current budget includes significant taxes on goods and services to maintain balance. However, the situation has deteriorated due to the recent devaluation of the Burundian currency by the Central Bank, coupled with a scarcity of foreign currencies in the foreign exchange market. As a result, the shortage of foreign currencies is negatively impacting the prices of imported products,” noted Nduwayo.
While Nduwayo attributes the overall price increase to the implementation of the general bill, Faustin Ndikumana, the head of Parole et Action pour le Réveil des Consciences et l’Evolution des Mentalités (PARCEM), a Burundian civil society organization committed to promoting good governance, combating corruption, safeguarding human rights, and advancing economic development, says that the current situation in Burundi is a result of poor governance, corruption, financial mismanagement, and inadequate project planning. These issues have deep roots in the socio-political conflicts that have plagued Burundi for many years.
On the other hand, Marie Chantal Nijimbere, Minister of Commerce, trade, Industry, and Tourism, diverges with them and identifies three main causes for prices surge in Burundi. These causes include the huge gap between imports and exports.
“In 2022, imports amounted to BIF 659.7 billion exceeded exports worth BIF 68.4 billion by a significant margin, leading to a severe scarcity of foreign currency, which has put pressure on the local currency and fuelled fears of food inflation,” explained Nijimbere.
The second reason behind the price surge is the fluctuating fuel prices in the international market, which is affecting local industries.
“The impact of fuel prices on companies is twofold; in Burundi, there is a shortage of grid energy, which means companies require fuel for power generation and supply chain. All these additional expenses must be factored in when selling products, leading to higher prices for end-users,” added the Minister.
The final reason for the price increase is the surge in the cost of foreign currency by the central bank.
“The central bank has raised its foreign currency exchange rate by up to 30%, from BIF 1980 to BIF 2890, which has affected traders since they import nearly 90% of the raw materials required by industries and companies to manufacture their goods,” concluded Nijimbere.
According to the president of ABUCO, the rising prices of basic commodities are causing significant distress to consumers, who are mostly low-income earners and taxpayers. In response to this situation, he urges the government to impose higher taxes on luxury items like beer, luxury homes, and harmful products such as tobacco to help offset the general state budget deficit.
Emphasizing Nduwayo’s inputs on fighting against inflation, PARCEM’s Faustin Ndikumana, says Burundi needs a clear and focused top-to-bottom development plan to combat inflation through a clear set of laws that discourage corruption and economic mismanagement.
The Minister of Commerce, Industry, and Tourism, Marie Chantal Nijimbere, on the other hand, said that tackling inflation is a long-term endeavor that requires the collaboration of all development partners of Burundi, both internal and external. However, She placed a particular emphasis on agricultural projects that promote exports as a means of achieving this goal by closing the huge gap between exportation and importation that pressures the local currency.
Shumi, a street hawker who is swallowing the bitter pill of inflation, calls the government to take laudable action by lowering prices, warning that if nothing is done, children will die of hunger.
“It has become challenging to make ends meet and provide for our families due to the high cost of goods. My beautiful daughters’ lives are at stake, and we cannot afford to watch them die in front of our eyes,” he concluded.