How expensive is Kigali?

Expenses in East Africa range across various indicators, making it hard to discern with certainty which the most expensive city in the region is. Kigali City is generally regarded as having the highest cost of living, an argument vindicated by food and electricity charges, yet when it comes to transport, the Rwandan capital offers probably the most affordable fares in the region. Many economists argue that when a single East African currency is finally ushered in, it will perhaps help level prices and hopefully make it less costly to reside in the region. In the last few years, the price of goods across the region skyrocketed partly due to the current world economic downfalls; even in Rwanda where inflation was curbed to single digits, traders were forced to increase prices largely because they mainly import from neighbouring countries. However, a cross section of market prices in various cities in the region shows that Kigali is expensive in some areas but relatively affordable in others. For example, whereas a dozen of eggs in Kigali go for US$1.82, they cost US$1.97 and US$2.27 in Kampala and Dar es Salaam, respectively. Similarly, while a litre of milk costs a dollar in Kigali, it will go for about US$1.34 in Dar es Salaam and US$1.1 in Kampala. On the contrary, a 500g loaf of fresh bread will cost the highest in Kigali, at US$1.18, and least in Nairobi, at US$0.65. In Dar es Salaam, it costs about US$0.92 and US$0.86 in Kampala. “Changes in prices are bound to happen depending on demand and supply especially in free market economies. The rate of inflation of a particular currency tells much on the place’s costs of living because it gives a picture of how much items a consumer can purchase without feeling as if they spent a fortune,” says Charles Sebaruma, a macro economics lecturer at the School of Finance and Banking (SFB). “Looking at that, I think Rwanda did a good job to ensure that its inflationary levels are the lowest in the region, which means that the value of people’s money is not disappointing.” Sebaruma argues that Kigali is considered as an expensive city because most of the products on the local market are imported from elsewhere. According to him, heavy importation is one the challenges Rwanda faces, largely due to the low production levels from the local industrial base. “If our strong currency can be supported by a productive manufacturing industry, then Kigali would not be as expensive as it may seem now. For example, if you compared a rural Rwandan dweller to the one in Uganda, you would find that the Ugandan spends less. It’s because his or her money carries more value (on the market) and most of the items they need are locally produced,” he said. A foodstuff dealer in Kimironko market, Stephano Bazimana, believes that foodstuff prices in Kigali are relatively expensive than before. “I have never been to any other city in East Africa to enable me to compare them, but I know that in Kigali, food prices have been increasing lately, although not at an alarming rate.” In Kampala, a kilogramme of rice costs about US$1.2, meat US$2.2, whereas in Rwanda, the same commodities go for about US$1.3 and US$3.3 respectively. For David Wafula Wanjala, a senior associate at an international audit firm, Kigali is “obviously the most expensive city in the region”, largely due to low supply of goods in the face of high demand. “I have been to all EAC capitals and I can tell you that Kigali City is way more expensive than the rest; when you look at the cost of the basic commodities like food, shelter and clothing. Uganda might have been hit hardest by inflation but it has the cheapest clothes; in Rwanda, clothes are more expensive,” Wafula said. “I believe that it all comes down to taxation and demand; importers to Rwanda increase prices to cover tax costs and when these goods enter the market, the traders are forced to, again, increase prices because of the surging demand.” However, the Director of Taxpayer Services at Rwanda Revenue Authority, Gerard Mukubu, said that market forces of demand and supply, coupled with market liberalization, are the major factors that influence prices in the country. “We don’t charge customs duties for imports from within EAC, as long as a trader shows a certificate of origin. When you survey the taxes within the region, you find that some of our neighbors have more charges than us on some products and vice versa. For example, we charge a high consumer tax rate, of 150 percent, on cigarettes because we want to discourage smoking,” Mukubu said. A business lady in Kigali, who preferred to be identified as Jane, finds Kigali cheaper than other capital cities across East Africa, mainly because of its high security and low crime rate. “The cost of living is not just about the price of items. I would rather buy an expensive item in Kigali knowing that it is safe and no one will steal it from me than buy a seemingly cheaper one elsewhere only for it to be stolen the next day,” Jane argues. On average, rent for an average single bedroom house in Kigali City, per month, will cost about US$100, whereas outside the city centre, the same would go for about US$70. A three bedroom apartment will go for about US$1,900 and US$250 outside the city centre. Compared to other cities in the region, rent in Kigali City is relatively lower. A single bed room apartment in the Kampala city centre nearly triples the cost in Kigali, to about US$325, whereas on the city outskirts, the same apartment will cost an average of US$250. In the same city, a three bedroom apartment will go for aboutUS$3,000 per month, but the price for a similar house on the outskirts will cost US$700. In Nairobi, a one-bedroom apartment will be valued at an average of US$363, whereas a three bedroom apartment is about US$663. In Bujumbura, a three bedroom apartment in the city centre will go for about US$955. Looking at statistics and mini surveys, one is tempted to deduce that whereas living in Nairobi is comparably cheaper than living in other cities in EAC, Kigali City gives value for money and is not necessarily more expensive than other cities. ivan.mugisha@newtimes.co.rw

National

How expensive is Kigali?