A global price rally of paper pulp amid shrinking domestic supply tripled tissue paper costs in Kenya and has kept the prices elevated for more than a year, shining the spotlight on local production of basic products.
During the period, tissue paper price has more than doubled after a pack of 10 rolls surged by an average of Sh300 to Sh500 or more, up from Sh200 previously.
The price shock has turned the basic product into a luxury in many homes, with shoppers now hunting for bargains.
A Business Daily spot check last week revealed that major retailers are selling a 10-pack of Hanan tissue paper at Sh545 while that of Premium Tissue is going for Sh449.
On offer, 10 rolls pack of Tena are fetching Sh499. Other brands that have recorded an increase in prices include Fay, selling at Sh220 for a four-piece pack, but a buyer will save up to Sh6 when purchasing 10 rolls pack.
Kenyan tissue makers attribute the sharp increase to the high cost of raw materials such as the wood-pulp, which is the primary raw material used in the production of toilet rolls due to a jump in costs.
Kenya imports most of its raw materials from Egypt, and the country has so far increased per unit cost of production to over 50 percent, further putting pressure on makers who push the same to consumers.
“The price increase on some of our products was done in 2022 considering the continuous rise in costs of raw materials and freight rates globally. As you are aware, this was also affecting other products in the market as well,” said Assumptah Nzavi, sales Coordinator-Corporate and Hospitality at Chandaria Industries Limited.
In Kenya, the pulp and paper industry is still largely dependent on fibrous wood for production, which was further affected by the government’s ban on logging.
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This has led to a massive increase in the importation of raw materials since the country cannot handle the pressure from the tissue makers.
“They might not say it openly, but the importation of wood pulp is one big contributor to the prices you are seeing on the shelves. I have personally interacted with some manufacturers and they decry some of the players within the same industry opting to import the pulps instead,” said a source at a tissue paper manufacturing factory who sought anonymity saying it is not in his capacity to talk on the behalf of the industry.
Despite having enough waste papers for recycling, tissue roll makers are still opting for the import decision partly based on the tedious process of gathering the available waste as well as the long process of converting them into usable raw material for tissue paper.
This has also seen a few players in the paper manufacturing industry benefit at the cost of the suffering consumers as they hike the price of the raw material.
Researcher Fredrick Onyango Ogutu from Kenya Industrial Research and Development Institute said dependence on fibrous wood has contributed to a fall in paper pulp and paper production, deforestation, and a rise in paper importations due to insufficient raw material supplies.
The importation of paper and pulp products has further led to the collapse of the paper industry in Kenya.
Kenya imports an average of 365,371 tonnes of pulp and paper annually, a heavy blow to the local producers. The current production level in Kenya is less than 20 percent.
Economic Survey 2022 data indicates that a year earlier, the paper and paper products sub-sector recorded a growth of 10.4 percent because of an increase in volumes of cartons, boxes, and cases by 4.8 percent and exercise books by 24.6 percent. This led to an increase in the production of toilet paper by 8.8 percent.
To protect local firms and deter importation of products that can be locally made, Investments, Trade and Industry Cabinet Secretary Moses Kuria last month said Kenya will introduce an Export and Investment Promotion Levy on paper and paperboard as well as steel and furniture.
That notwithstanding, tissue paper prices are expected to go up further with higher power tariffs. The toilet paper industry is an energy-intensive sector, especially in drying.
Tissue makers have also attributed the high cost to the dollar crisis. The Kenyan shilling has so far lost approximately 25 percent of its value against the greenback further compelling manufacturers to dig deeper into their pockets to meet the high foreign exchange rates.
“We have seen a 65 percent increase in the purchase of raw materials so far. As the Kenyan shilling continues to lose its value against the US dollar, we the manufacturers have no option but to reprice our commodities,” said a source at African Cotton Industries. BY DAILY NATION