Prices could soar as North Africa turmoil continues

Local prices are likely to rise sharply as Rwandan importers that ship goods from North Africa face thin margins due to the prolonged political turmoil in the region, a top official said. Import levels from Egypt amounted to Rwf13.3 billion in 2010, according statistics from the National Bank of Rwanda (BNR). The main imports included soft drinks concentrate, wheat flour and sugar, mainly imported by Bralirwa. In the period from January to March this year Rwanda imports from Egypt reached Rwf2.7 billion. “The lack of market links between Rwanda and North African countries have not had any depressing impact on our exports,” Desire Ndwaniye, a Senior Trade Officer at the central bank said. He, however, said that if the crisis persists, importers may decide to import from other countries where it is safe to ship their goods. This may be risky since transportation cost may be higher, hence forcing traders to pass those high prices onto the consumers, he explained. “We have not had any trade ties with these two countries (Tunisia and Libya).” The central bank says the country will opt for alternative suppliers and look for other safe routes in order to minimize the costs. The only direct impact of the crisis so far has been the spiralling cost of fuel that have pushed inflation upward and thus affecting the country’s transport sector, said Desire. John Rwangombwa, the Minister of Finance and Economic Planning recently said that he expects inflation to rise sharply from 0.23 percent in December 2010 to 5.9 percent in December 2011. The projection, he said, was occasioned by a big increase expected in oil prices due to the problems in the Arab world. Roger Munyampenda, the Chief Executive Officer (CEO) of the Private Sector Federation (PSF), told Business Times in a recent interview that if the political unrest in North Africa persists, it will hurt the region’s import sector. “Direct suppliers or importers will be hurt... If the Suez Canal can’t operate, then there could be a major crisis at global level. The EAC will be affected,” Munyampenda said.He said the construction sector was likely to be the main casualty. Ends

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Prices could soar as North Africa turmoil continues